> FINANCIAL MARKETS
Global Press eBook 2010
CONTENTS Financial Times 3 Securities Industry News
Asia ETrading 7-8 CNBC 9 Automated Trader
BBC 13-15 Italia Oggi 16-17
FT TRADING ROOM: CONTROLLING RISKS BY DAWINDERPAL SAHOTA DATE: APRIL 12, 2010 LOCATION: HTTP://VIDEO.FT.COM/V/76682732001/APR-12-CONTROLLING-RI The ability to trade on multiple venues is attractive but also has risks. How do regulators and brokers keep tabs on where trades are hap- pening if they are being done across multiple venues? Giles Nelson, chief technology strategist at Progress Software explains how the added complexity can be tackled. (5m 49sec) -- http://video.ft.com/v/76682732001/Apr-12-Controlling-risks-
SIFMA TECH 2010: PROGRESS TURNS ARGENTINE BANK LIVE BY TOM STEINERT-THRELKELD DATE: JUNE 21, 2010
Security Industry News
Progress Software Corporation said Monday that the foreign exchange operations of the Argentine financial services group, Banco Bilbao Vizcaya Argentaria (BBVA), have gone live on the Progress® Apama® FX Aggregation Accelerato.. BBVA FX traders are now using the Progress Apama plat- form along with its customized dashboards to view and trade across aggregated liquidity from a number of banks and electronic trading venues for foreign exchange trades. The announcement was made in conjunction with the start of the Securities Industry and Financial Markets Associa- tion’s 2010 Technology Expo. The Expo starts Tuesday, June 22, at the New York Hilton. “The FX market is a strong growth area for us and one in which we plan to make giant strides,’’ said Javier Fernandez, BBVA’s head of FX trading. Progress software gives a “broader and deeper visibility of market activity.”
SIFMA 2010 WRAP 4.0 BY STEWART EISENHART DATE: JUNE 23, 2010 Complex event processing (CEP) platform developers continue generating news at the 2010 SIFMA technology conference, indicating either well-oiled public relations campaigns or, more likely, wider acceptance of these technologies across various sectors of the financial industry. First, Progress Software has launched the Apama Capital Markets Foundation, a next- generation version of its Apama Complex Event Processing platform accommodating a wider swath of tools to develop trading applications. New features support rapid trading strategy creation and testing, market surveillance tools and risk management functions.
Key components of the Apama Capital Mar- kets Foundation include a new market data architecture driven by Apama’s parallel event processing engine; support for new order types and functionalities for quant trading application development; capabilities to integrate with a wider array of third-party analytics providers; and a risk firewall delivering real-time pre-trade risk management. Other features include an enhanced exchange simulator for strategy back-testing, as well as latency measurement tools. Next, tick data management and analytics vendor OneMarketData has won investment bank Jeffries and agency broker Instinet as clients of its OneTick CEP platform and database. Jeffries plans to use the OneTick CEP and Database for its algorithmic trading product strategy and quant trading operations. Factors driving the investment bank’s decision included OneTick’s seamless CEP and database integration, built-in analytics and low total cost of owner- ship, according to OneMarketData. Instinet selected the OneTick system for its high-performance tick database and analytics system. According to Instinet, as the broker’s clients access its transaction cost analysis tools more frequently, an integrated tick data management system becomes crucial in order to collect and analyze data needed for effective TCA offerings. And StreamBase, having already announced a collaboration with Solace at the start of the conference, has now revealed a partnership with graphics processing unit (GPU) developer Nvidia to further enhance the computing power and scalability of its CEP offering.
The Nvidia integration work will be hosted by StreamBase’s Component Exchange developer community. Bottom line: CEP providers are clearly making strides in terms of product improvements pertinent to buy-side and sell-side firms’ operational needs; ongoing efforts to push the functionality envelope by these vendors should attract more adherents to these capabilities beyond their early, high-frequency-oriented adopters. Instinet selected the OneTick system for its high-performance tick database and analytics system. According to Instinet, as the broker’s clients access its transaction cost analysis tools more frequently, an integrated tick data management system becomes crucial in order to collect and analyze data needed for effective TCA offerings. And StreamBase, having already announced a collaboration with Solace at the start of the conference, has now revealed a partnership with graphics processing unit (GPU) developer Nvidia to further enhance the computing power and scalability of its CEP offering. The Nvidia integration work will be hosted by StreamBase’s Component Exchange developer community. Bottom line: CEP providers are clearly making strides in terms of product improvements pertinent to buy-side and sell-side firms’ operational needs; ongoing efforts to push the functionality envelope by these vendors should attract more adherents to these capabilities beyond their early, high-frequency-oriented adopters.
Waters Technology 6
PROGRESS SOFTWARE LAUNCHES MARKET SURVEILLANCE AND MONITORING SOLUTION ACCELERATOR IN INDIA DATE: JUNE 28, 2010 Progress Software Corporation, a leading software provider that enables enterprises to be operationally responsive, has further advanced its real-time market monitor- ing and surveillance capabilities with the launch of a Progress® Market Surveillance and Monitoring Solution Accelerator prod- uct. The Market Surveillance and Monitor- ing Solution accelerator enables financial institutions, exchanges and market regula- tors to detect patterns of abusive or er- roneous trading activity and take corrective action to prevent trading fraud and abuse in real-time. Moreover, the new Solution accelerator automates the steps necessary to manage any subsequent investigation and supports the sophisticated case manage- ment of alerts. The Progress® Market Surveillance and Monitoring Solution Ac- celerator will prove to be an important tool for the Indian Capital Markets where high trading volumes across stock exchanges providing opportunities for fraudulent trading activity. The new Solution is quite effective in monitoring and surveillance. When an unusual market event occurs – for example, an unusually large or suspected rogue trade – an alert is automatically generated in real-time to signal that there is a potential issue. The rules-based platform allows such alerts to be assigned to specific individuals or groups who are responsible for taking the appropriate actions. For example, if a firm’s trading patterns begin to exhibit behaviour indicative of insider trading, an alert would immediately prompt a compliance officer to notify the trading desk, the market, and regulators of a potential problem, and begin an investigation before more damage is done. The Progress Market Surveillance and Monitoring Solution Accelerator product is non-intrusive and senses, tracks and responds to market events in real-time, without compromising ultra-high frequency execution speed. The new Market Surveillance and Monitoring Solution accelerator is built on the Progress® Responsive Process Management (RPM) suite which was launched in India last month. The Progress RPM suite brings together real-time visibility, immediate senseand-respond, and continuous business process improvement capabilities into one unified platform. This Progress RPMTM solution accelerator is a significant advancement to the Progress Apama® Market Surveillance and Monitoring Accelerator product announced last year with enhanced fea- tures including improved market abuse pattern detection, integrated workflow, alert management, case management and collaboration.
“The financial trading market carries high risk of fraudulent and erroneous activity which is difficult to control. This is as much a reality in In- dia as in the rest of the global markets. This is primarily because of the massive increase in trading venues and vehicles which has created a fragmented and complex marketplace that is increasingly difficult to regulate”, said Kaushal Mashruwala, Regional Vice President, Progress Software India. “It is imperative to be able to keep a track of these mistakes and frauds before they take place which will otherwise result in market fluctuations. Real-time market surveillance across trading destinations, and across trading firms, helps to anticipate and to prevent these from happening before it is too late.” Regulators, exchanges, ECNs and MTFs themselves also need to monitor market activity proactively to prevent fraud and ensure compli- ance. The patterns of trading which are of interest may change rapidly over time as regulations and trading behaviour changes. The Progress Surveillance Accelerator provides sophisticated and easy-to-use tools that address their unique needs, with the power to adjust to different scenarios as the market evolves. The latest in a series of Progress RPM Solution Accelerators to be announced by Progress, the new Market Surveillance and Monitoring Accelerator harnesses the power of the unique Progress RPM suite – bringing together capabilities of Business Transaction Management (BTM), Business Event Processing (BEP) and Business Process Management (BPM) technologies through a unified, interactive environment, the Progress Control TowerTM. The Progress Control Tower technology offers an interactive graphical studio to model, visualize, adjust and control complex business processes, of which market surveillance and monitoring is a prime example.
FUTURE OF MARKET SURVEILLANCE DATE: JULY 4, 2010 HTTP://WWW.CNBC.COM/ID/15840232/?VIDEO=1537394108&PLAY=1
Paul Henaghan, vice president, Asia Pacfic & Japan at Progress Software, tells Richard Martin of IMA and CNBC’s Martin Soong, Karen Tso & Sri Jegarajah how the ‘flash crash’ in US markets could have been avoided.
RBC DEPLOYS PROGRESS SOFTWARE DATE: SEPTEMBER 13, 2010
Progress Software Corporation has announced that the Royal Bank of Canada (RBC) has successfully deployed the Progress® Apama® FX Aggregation solution accelerator to support its Foreign Exchange dealing operations. Dr. John Bates, Progress Software’s chief technology officer, senior vice president of corporate development and strategy and Apama co-founder, commented: “The early adopters of Apama products in FX were banks consolidating various trading screens on the dealing desks. More recently, we are seeing a shift to banks deploying Apama products for Liquidity Aggregation and Smart Order Routing as the foundation of a broader platform for their FX eCommerce operation. In addition to direct dealing, price formulation, distribution, credit limit checking, pre-trade risk controls, auto-hedging, order aggregation and flow internalization are all components of this broader eCommerce infrastructure. It’s exciting to see banks like RBC building out this vision, generating immediate and significant value for their clients by exploiting the power and flexibility of the Progress Apama platform.”
AUDIT TRAIL OR SNAIL TRAIL? BY MAX BOWIE DATE: AUGUST 19, 2010 A consolidated audit trail might sound good on paper, but as Max discovers, the SEC’s proposal has failed to impress many in the industry. However, while cost is a major fac- tor, the critics might at least look to invest in some sturdy lightning rods. How much is avoiding another ‘Flash Crash’ worth? That’s the question US market participants are asking as they respond to the Securities and Exchange Commission’s (SEC) proposed real-time consolidated audit trail of trading activity across equity and options markets to spot anomalies and potential abuse. “The information in the consolidated audit trail might give earlier indications on the state of the markets, generating warnings of impending problems such as the Flash Crash,” says Stephen Elston, managing director of Quantia Analytics, whose analysis of May 6 shows monitoring market activity in real- time would have generated warnings more than a minute before the worst of the crash in some stocks. However, the proposal has met with a mixed reception from the markets. For example, Finra (the Financial Industry Regulatory Authority)— which already produces the Oats (Order Audit Trail) and Trace consolidated trade feeds, and would be a key component in any solution— says the SEC “significantly overvalued the regulatory benefits” of real-time reporting, and that real-time data is less reliable than corrected and validated information. Wells Fargo Advisors echoed this, saying real-time reporting “inhibits” detection of fraudulent or manipulative activity, since “accurate market information often does not happen in real time,” but “only ‘settles down’ in a period after the real-time execution.” But to be able to monitor for more than just suspicious activity—for example, to detect a systemic problem and take action in real-time— the SEC needs raw, un-corrected data to see exactly what caused actions at a point in time. Once data is validated and corrected after the fact, it can become harder to detect the cause of an incident. “You don’t just need feeds, a ticker plant and databases... you also need to be able to look at these in real time and spot patterns of behav- ior that indicate something is going awry—from a trader trying to manipulate the market to an issue with a trading application submitting lot of orders in a short time, which might indicate an algo trading system going wrong,” says Giles Nelson, deputy chief technology officer at Progress Software. Wells Fargo was also concerned that the 32-month estimated schedule for implementation would be “woefully short,” and that “rushing through such a dramatic change... poses a great risk of harm,” resulting from a lack of vetting and stress-testing, suggest-
ing a five-year plan would be more realistic. Among the plan’s supporters, new exchange Direct Edge said it “would significantly enhance the capabilities of regulators to police trading across asset classes... [and] create a more complete timeline of an order’s lifecycle,” while TD Ameritrade called it “the right solution and... overdue,” but estimated its initial spend to support its contributions to a system would be $1.25 million, including $750,000 in devel- opment and $500,000 for hardware, and would require three full-time staff. Many said the industry-wide costs required to implement a consolidated audit trail—estimated by the SEC at around $4 billion, with ongo- ing annual costs of around $2.1 billion—are too high, though others believe a system can be achieved for much less. In fact, a consortium calling itself TickLab—comprising data architecture consultancy Noetic Partners, data vendor Activ Financial and high-performance computing technology vendors Cray Research and XtremeData—has proposed that it can build a system that includes full- depth tick data capture and high-performance storage for fast retrieval for less than $100 million, which would cost less than $100 million per year to run. So, how much is an orderly market worth? Those who believe lightning never strikes the same place twice might say the benefits aren’t worth the cost. But lightning always strikes again somewhere, and—as the saying goes—those who don’t learn from the past are doomed to repeat it.
REAL-TIME COMPUTING GOES FROM WALL STREET TO HIGH STREET BY KABIR CHIBBER DATE: OCTOBER 1, 2010 Earlier this year Vishal Sikka was sitting in a cafe, chatting with the chief technology officer (CTO) of a major European consumer products company.
They were in Berlin. It was a sweltering day, with the thermometer soaring above 37C (99F). “The fundamental problem we have, Vishal, is predicting demand,” the executive lamented as he looked onto the square. “For example, ice cream.” If the company could monitor sales of ice cream - or bottled water or sun tan cream - on hot days like this one and then gauge future demand, he said, it could alter the way the company behaved. “How much?” Mr Sikka asked. “Just six days like this a year would change the profitability of our company,” the CTO replied. ‘Truly transformational’ Mr Sikka, an executive board member and responsible for technology and innovation at SAP, the world’s largest maker of business soft- ware, went home and told his teams to design software that would allow that company to follow its customers in real-time and analyse their patterns of behaviour. This involved tracking the company’s 400 billion of retail transactions a year - that is 40 terabytes of data - as they are coming in. The proto- type is almost ready to be trialled. “You are posing questions in real-time to the data,” Mr Sikka says, “and not only that, but the actual data you are posing questions to is also updating in real-time.” Credit Suisse’s Merlin app Credit Suisse has a real-time currency trading app for Apple’s iPhone and iPad “This is truly transformational,” he says. “That’s what all our customers are telling us.” Real-time - the act of responding to events as they happen - is changing the way that the world behaves. Smartphones put everyone a click away from the Internet. Location-based services like Facebook Places and Foursquare let others see ex- actly where you are. Twitter - which generates in two minutes the amount of text found in the entire works of William Shakespeare - gives live and instantaneous reactions. But in the business world, new technologies allow companies to see what their customers are doing - to the latest millisecond. Bank innovation In technical jargon, the software that allows this to happen is known as complex event processing (CEP). Though one of the innova-
tors behind the technology, Giles Nelson, does not entirely like the term. Continue reading the main story “Start Quote It’s difficult to think of an industry that isn’t affected by real-time” End Quote Mark Palmer StreamBase “It makes people think its more complex than it actually is and puts them off,” Dr Nelson says. “It’s really quite simple. “Speeding things up is what’s happening across all industries,” he says. Dr Nelson, the deputy CTO of Progress Software, invented the technology behind its CEP platform, Apama, while a PhD student at Cam- bridge in 1993. Similar work was also being done in the US. “In the late Nineties, there was an awareness among academics that things would be going in the direction of real-time,” says Mark Palmer, the head of Massachusetts-based StreamBase Systems, whose technology is derived from research at MIT and other leading US universi- ties. The first users of CEP were banks - not only stock traders but the more exotic instruments that were starting to take off, such as options, futures and other derivatives.
The software uses mathematical algorithms to track stocks as they move. Take, for example, two oil stocks that move in tandem. Banks can track the two stocks over, say, a 10-second period. If one stock moves even a tenth of a percentage point, it automatically buys the other. ‘Practically museums’ The use of so-called “algo trading” has contributed to huge increases in the volumes of trading over the past decade, as much trading is automated. “It used to be that there were people in London and New York on trading floors doing this,” Mr Palmer says. “Those days are over. Those floors are practically museums.” Trading in the currency markets has grown by 20% in the last three years to $4 trillion a day, with London by far the world’s biggest hub, the Bank for International Settlements recently said. London-based spread-betting firm CMC Markets - which allows non-specialist retail investors to make bets on the financial markets - has an average trading volume of $10bn a day and once used Apama before abandoning it for StreamBase. StreamBase CEO Mark Palmer Mark Palmer’s StreamBase software is used by many of the top banks And Swiss bank Credit Suisse now has an application for the iPhone and iPad that allows its clients to make live options trades on the go using its Merlin currency trading platform. “Algo trading was less than 10% of trading at banks,” says Mr Palmer. “Now it’s 50 to 70% of trading.” Two-thirds of the top banks use CEP software now. The software has also been blamed for exacerbating the financial crisis. Computer programmes automatically sold stocks as fear spread in the markets, because their algorithms have built-in “sell” orders. CEP was also blamed for the sharp drop in US shares on 6 May - when the Dow Jones index fell by almost 1,000 points in a matter of minutes. Yet the use of the software is spreading. The London Stock Exchange - through its Turquoise trading platform - uses Apama, as does the Financial Services Authority, which uses Dr Cohen’s software to monitor fraud. HSBC uses software from US business analytics firm SAS to approve in real-time every single credit card transaction. Future uses Now, real-time processing software has spread beyond Wall Street and the City to other industries. Apama software Apama software is used to power the real-time capabilities of many large companies Apama is used by customers in the Netherlands - Rotterdam has the largest port in Europe, with an annual through-put of about 400 million tons - to manage the logistics of ships, which often fail to arrive on time and spend hours waiting to dock and unload at ports, wasting fuel, money and time. Rather than wait until the end of the day or week, supermarkets and other large multinational retailers use the software to monitor their stock inventories in real-time. Telecoms companies are using it to manage the strain on their networks. Mobile phone firm Three, in Italy, is using Apama to test whether it can offer customers faster music downloads - for a price - when network usage is low.
SAP’s software is also being deployed on offshore oil rigs and even in hospitals around the world. This allows diabetic patients, for ex- ample, to have their blood sugar levels monitored and insulin administered if it gets dangerously high. StreamBase has discussed using its software to monitor patients in hospital, looking for abnormalities and alerting doctors immediately, before the situation becomes critical. Mr Sikka says a large British gas company recently started using its software to analyse the data from smart meters of 60,000 customers in London, and discovered that there was a spike in energy usage around 7pm. The firm changed its tariffs to account for that. Future applications that are being discussed include the military, such as real-time monitoring of troop and tank movements. StreamBase is already used by the US National Security Agency to monitor security threats. “It’s difficult to think of an industry that isn’t affected by real-time,” Mr Palmer says.
UNA MOLLA IN AZIENDA PER REAGIRE SUBITO BY ANDREA SECCHI DATE: JULY 6, 2010 In Progress Software si parla di reattività operativa: al verificarsi di un evento l’azienda può reagire subito, spesso anche in maniera automatica. Un errore nelle contrattazioni sui mercati finanziari, per esempio, un’occasione da non lasciarsi scappare o un cliente che si trova in una situazione giudicata a rischio, l’importante è poter monitorare la situazione per offrire una pronta risposta.
Progress mette a disposizione una torre di controllo virtuale che offre ai responsabili aziendali la possibilità di visualizzare ciò che sta accadendo all’interno dell’impresa e di modificarlo da un’unica postazione. Fra i settori che più hanno necessità di un ap- proccio di questo tipo c’è quello dei servizi finanziari e, in particolare, del trading ad alta frequenza, della sorveglianza e della gestione del rischio, della conformità alle normative e della prevenzione delle frodi, così come il settore delle telecomunicazioni con la gestione reattiva degli utili e i servizi location-based e l’industria dei trasporti e della logistica con tracciamento in tempo reale. L’ultimo accordo in ordine di tempo è stato quello con il Banco Bilbao Vizcaya Argentaria (Bbva), che ha scelto di adottare la soluzione di Progress Apama Fx aggregation accelerator per le proprie operazioni di Foreign exchange (Fx), il mercato valutario. Da una parte i trader di Bbva usano la piattaforma per visualizzare ed effettuare scambi sulla liquidità di un maggior numero di banche e electronic communications network, dall’altra il software consente anche all’istituto di lavorare con algoritmi che presiedono alle trans- azioni e consentono di non violare le politiche decise dal management, così come di non incorrere in errori. Tipico esempio è la digitazione di una cifra esageratamente alta, che potrebbe portare a grossi squilibri non solo per la banca, come in un caso realmente accaduto. «Nel trading si avvantaggia chi è in grado di aggregare diverse borse e marketplace e chi è in grado di elaborare e lavorare i prezzi veloce- mente», spiega Mattia Bruzzi, senior sales account manager southern Europe di Progress. «Collegarsi, aggregare mercati, poter gestire le innumerevoli variazioni di prezzo significa fare la differenza nei conti. In questo meccanismo si inserisce Apama. Si tenga presente che un ruolo cruciale lo giocano gli algoritmi usati dalla banca per il trading. Le banche più grosse li sviluppano internamente e li tengono segreti perché alla fine sono il modo con cui si fanno i soldi. Apama è una piattaforma, noi diamo un frame con cui costruire gli algoritmi e permet- tiamo di ridurre notevolmente i tempi necessari per fare ciò. Diamo una macchina che poi viene preparata per la corsa».
La stessa soluzione scelta da Bbva è stata adottata un anno fa anche da Unicredit, sempre per il Foreign exchange. La prima adozione è avvenuta all’interno dei desk Fx di UniCredit Londra, con previsione di estenderla a New York e a Hong Kong. Anche in questo caso i trader hanno potuto impostare i propri parametri negli algoritmi, così da poter prendere decisioni rapide. «I settori e gli utilizzi possono essere molto diversi», continua Bruzzi, «si possono controllare i livelli di servizio imposti e ricevere gli alert, si può monitorare l’allocazione delle risorse umane compatibile con livello di operazioni svolte, sorvegliare sulle frodi con carta di credito e così via». Andando oltre il settore finanziario si trova l’esempio di 3 Italia, che utilizza la soluzione Complex event processing Progress Apama per te- nere sotto controllo la spesa dei clienti e i servizi richiesti. Il sistema di billing gestisce i dati provenienti dalle piattaforme di rete e utilizzati per consentire o meno l’erogazione dei servizi richiesti dagli utenti in base alla loro disponibilità di credito, per i clienti con schede ricarica- bili, o allo stato dei pagamenti per i clienti in abbonamento. (riproduzione riservata)
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