Monday Mar 16, 2009

Gambling with Finance

CIO Connect, in their winter 2008 magazine, have published an interview with Robin Osmond, Betfair's CEO about his plans to utilise their software platform as a vehicle for trading financial products. They claim to be starting with spread betting, which seems available at http://www.tradefair.com/ but are looking to offer FX trading at some time in the future.

Spreadbetting for financial products has been around for a while and has already played the regulatory arbitrage by being considered as gambling and treated that way by HMRC. Betfair innovated the ambkling world by building a betting exchange, and removing the risk of running a book from their business model. Their software, and more importantly their information systems architectural skills might well apply to financial products exchanges but can they build the trust that'll bring consumers to their site, and solve the problem that the real money is in trading.

I expect that meeting a new group of regulators who in the UK at least have a reputation problem of their own will keep them busy. While it seems a simple diversification to many, I wonder if the difference in customer base, and regulatory environment will make this harder than it would seem.

Tradefair's CTO, Martin Thompson, was also interviewed and talked about building an integrated system, from business logic to silicon. It'll be interesting to see what they've done, if they ever make it public.

I have linked to CIO Connect, above, but they have a wayward re-direct rule set that issues some stupidly long URLs presumably to track activitty and they like to keep their stuff behind their firewall to protect their subscription revenue.

tags:

Monday Apr 21, 2008

Are "Quants" suitable for grid infrastructure?

Are "Quants" suitable for grid infrastructure? investorwords, a finance dictionary site, defines a quant as "One who performs quantitative analyses". Not so useful; while I have known people bet on horses because they like the name, I have not really heard of people investing in the stock market using this strategy, so evaluating the value of stock using numbers seems pretty basic, and in their eyes a Quant is a person. They define quantitative analyses as "The process of determining the value of a security by examining its numerical, measurable characteristics such as revenues, earnings, margins, and market share." If measuring the value of one stock, it is unlikely that, parallel algorithms are necessary. The data points are too few to warrant applying grid or parallel programming techniques. If analysing a portfolio of many stocks using these techniques, or a whole bank portfolio, then grids become more useful. It really depends upon the size of the portfolio, and the required response time.

A chartist on the other hand, performs "Technical Analyses", which investorwords, defines as "A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. " Presumably the name chartist, comes from the fact that they use graph representations of the data series they analyse. However, the analysis of history increases the number of data points involved, and when one tries to apply technical analysis to portfolios, the problem of scale and the attributes amenable to parallelism come into the frame. The use of Grid software and hardware architectures probably becomes more useful earlier.

Neither of these techniques however are truly applications; they can be used to support trading decisions, risk evaluation, capital adequacy calculations, and pretty much any decision which involves evaluating today's and tomorrow's value of a financial instrument, be it treasury, equity or derivative.

investorwords is in my sidebar, and in my del.icio.us feed.

tags:

About

DaveLevy

Search

Archives
« April 2014
MonTueWedThuFriSatSun
 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
    
       
Today