Technology & Finance
Tuesday, June 30, 2009
For House Fans, a Spy Novel from Hugh Laurie
For someone as perennially unemployed as Thomas Lang, life certainly can be busy. It helps, of course, that he is ex-Army and tapped to undertake a complex mission for a secret arm of the British Ministry of Defence. Lang has the sort of parallel universe life that House exhibits, and nearly an equal level of cynicism.
Laurie keeps him moving, with wryly amusing and counterintuitive commentary on the people he deals with in embassies, on the street, and in a terrorist organization—but I don’t want to give too much away.
As befits an exercise in high literature, Lang has a fast bike—a Kawasaki XXR 1100 and a girlfriend in a decidedly fashionable TVR convertible—much more distinguished than an Aston Martin.
Laurie someone manages to fit into his account a reference to John Boyd, a US Air Force pilot and strategist who devised the OODA Loop (Observe, Orient, Decide and Act). Boyd taught pilots that if they could maneuever fast at the start of a fight they could force their opponent to react and with proper speed and training, they coudl get inside the enemy’s ability to respond. It’s something the best investment banks do with fast high speed analytics like Kx Sysstems—they can get to the proper answers fast and anticipate what the next tier is capable of, so they grab the best prices and sell them on.
But I digress...The Gun Seller is a fast-paced, complex book that should please anyone who thinks an evening with House would be delightful. Ok, who thinks an evening observing House would be delightful.
Sunday, June 28, 2009
SIFMA -- A Dinosaur Waiting for its Meteor to Arrive?
“It’s kind of sad to see a show dying,” remarked one public relations person on the opening day of SIFMA. The most common comment during the event was how the conference had shrunk since last year.
Some of that is simply a function of the economic crisis, said one vendor. Firms are guarding their resources and many decided not to spend their budget on SIFMA. Among the conspicuous missing – Microsoft, SunGard ad Thomson Reuters.
Not that New York lacked capital markets events of interest that week. Larry Tabb drew several hundred to an evening seminar at the W on Monday ahead of SIFMA.
SunGard drew several hundred to its own event at the Essex House – it was standing room only during the morning keynote by Silver Lake’s co-founder Chris Hedges. By contrast, the afternoon keynote at SIFMA drew about 150 and more than a few got bored, as I did, during the HP speech and left. One colleague said it just seemed like a sales pitch.
Content has never been a reason to attend SIFMA, although back in the old SIA days it did at least draw keynotes like Sun’s CEO Scott McNealy and Mike Bloomberg.
Smaller focused shows like Russ Flagg and Pete Harris’s series like Java on Wall Street fill the available space at the Roosevelt by offering strong, focused content with strong speaker lists. More focused shows also offer better networking opportunities as well. In fact, Flagg Management os actively courting SIFMA vendors for High Performance on Wall Street with this pitch: “Show your SIFMA products at the2009 High Performance Computing, Sept 14, featuring HPC, Low Latency, Virtualization and Cloud Computing.”
The breadth of SIFMA’s technology conference may be working against it, and the drinks receptions at end of day are not particularly interesting. The scheduling is also plainly nutty…starting at noon on Tuesday and having an exhibition hall opening Thursday morning, but with no program.
As in the past, the show is still plagued by souvenir collectors with no apparent tie to the industry. One elderly gent has been attending for years, pulling along a wheelie bag to stash any goodies he can find on the stands. Participants like that make the show look like a joke, unless you’re a vendor paying good money for a stand. They probably don’t find it amusing.
One analyst said he was going to try to get a few analysts from other firms to approach SIFMA with suggestions for improving the show.
SIFMA should pay attention. Conferences come and go on a regular basis, and this one looks like it’s on the way out.
Saturday, June 20, 2009
Why Epson, Fujitsu Web Sites Suck
David Platt, where are you? Didn’t you promise a book about web sites as a followup to your “Why Software Sucks?”
So I am ordering a printer from Epson...I get a cancellation with a list of possible reasons, such as credit card refusal, credit card info wrong, incorrect address, etc.
7 possible reasons. Nothing specific. SEVEN! Where to start?
I call Epson. Go through all my information again. They seem to confirm the order. I figure it is all set.
Several days later another cancellation. Call again. This time the phone person at least realizes the problem is that they had called my cell numebr to verify and hadn’t reached me. My cell doesn’t work in the woods of Wisconsin and I hadn’t carrired it into town, so I hadn’t received the call. Good thing the pace of life is slow and I am not in a hurry for this.
I call. Verify the information and ask if they can send the order through. Nope. I have to go back to the Web page.
The Web wants to me register. I think I had, but it didn’t appear, so I register again.
No record of the order.
Fill out the order and then my shipping address and add my email. You’d think that with a printer they might offer a package of cartridges for all the ink types. Nope. Just three appear and if you check them the next three. Or you can go to ink cartridges, but it has no record of the type of printer, so you have to find it in the long list and then order the ink. Again, no single package containing them all.
Oops, that email is registed, please sign in.
I do. But the site has wiped out my shipping info. Have to enter it again. Ah, I see the advantages of registering. Just like trying to order parts from Fujitsu...I can’t just order a $30 spare cord, I have to go through the whole use of my existing registration or register fresh.
Fill it all out again and the order goes through. We shall see if Jon on the verification desk remembers he talked to me.
Do execs ever use their own web pages? I remember a senior guy from Progressive who said everyone in the company has to order their own insurance through the web site, and he checks with his mom to see if she finds it easy to use.
Pretty good idea…
Thursday, June 18, 2009
SIFMA CEO Says Industry will Work with Washington
The U.S. needs a single financial stability regulator, said Tom Ryan, CEO of the Securities Industry and Financial Markets Association (SIFMA).
In a recent presentation at a Reuters conference, Ryan said that regulatory agency will need better information.
“Regulators are basically rear view people.” They have been operating with data that is three months old. To be effective, they need improved operations and technology and real-time data and information. Regulators can’t see the risks among institutions unless they have the data in real-time.
“We need a regulator who will be a collecting point for all this information.”
Ryan, who was director of the Office of Thrift Supervision (OTS) during the savings & loan cleanup in the early nineties said that the division of responsibilities among regulators contributed to the financial crisis. The OTS thought the sophisticated options-related mortgage products were fine, the Office of the Comptroller of the Currency (OCC) wasn’t sure, while the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve considered them too risky.
“They talked about barring some of these products but never did. Different institutions had regulatory authority and exercised it different fashions. A regulator with overview could have walked in and said ‘No, we need to stop. The complexity is too great.’”
The global financial crisis is not over; we have just entered a quiet period, Ryan added. In his presentation, he outlined key steps to improve financial services. Ryan said that an industry survey which SIFMA commissioned from McKinsey asking how to fix securitization showed that the top priority among investment banks is fixing the way credit rating agencies work.
“If we do not fix securitization we have a massive problem on our hands,” Fifty-five percent of consumer finance was securitized, he added, and that has now fallen to a fraction of what it was. SIFMA, which had opposed laws requiring originators to retain a portion of their lending now supports 5 percent retention, he added.
“We are being very reasonable in our approach. We know that things are going to change. We want to help regulators change things in a responsible way. f they are not changed in a responsible way the industry, which is global and the lynch pin to economic development, won’t operate in an effective and efficient fashion.”
Saying Wall Street is ready to cooperate with the government in making improvements, he said the industry had pushed financial engineering to a level of complexity which was unsustainable.
“We admit part of this is our problem and we need to be constructive about fixing it.”
Both the U.S and the UK need a resolution authority to take care of institutions that are at risk or broken, such as AIG, Lehman Brothers, Fannie Mae and Freddie Mac, Ryan said.
“We are still making it up on the fly. We have conservatorship for Fannie and Freddie; the Fed pushed firms into bankruptcy because there was no resolution authority.”
Letting Lehman fail was clearly a mistake, added Ryan, but he had high praise in general for the way the government agencies handled an unprecedented crisis. “The government did a helluva job and they had no playbook. They didn’t know how to back up the dump truck filled with money to stabilize the system so panic didn’t infect the financial system. They did it weekend after weekend, and closely coordinated with the EU—mostly the Brits—and the Canadians.”
He expects the U.S. to have a systemic regulator by the end of this year or the beginning of 2010 and Europe to follow sometime after that.
“Politics in Europe are much more complex than in the U.S. They have a machine that is more press related so they are out front with ideas,* he added. But the complexity of getting something done is much greater where regulations have to be implemented by each nation state.
Sunday, June 14, 2009
What Role Should Derivatives Play in the Future?
What role should derivatives play in a reformed financial services marketplace?
I have yet to see much intelligent discussion on the topic and was really disappointed that the FT, in a full page article, resorted to a simple comment from a market participant and never sought other opinions:
“Forcing OTC products on to exchanges ... would result in increased risks and costs for end users,” says Mr Clark of the WMBA, which says British pension funds have saved themselves £40bn recently by hedging with derivatives. Or as Anthony Belchambers, head of the Futures and Options Association, says: “This kind of regulatory pressure will distort free-market competition and restrict product diversity.”
Really? Could they get along without the swaps? How does the $40 billion in alleged savings compare to the global market losses in the last two years, and are they related?
In the meantime, bankers in London are preparing to exploit any transatlantic regulatory gaps. “Only 25 per cent of all OTC trading actually happens in America,” one senior London-based banker says. “So we don’t think what Geithner says is going to change anything for us ... and even if [Brussels] does the same, activity will just go to Singapore or Switzerland instead.”
Between Warren Buffet’s description of derivatives as financial weapons of mass destruction and ISDA’s assurances that the world wouldn’t be safe or profitable without them is plenty of scope for deeper evaluation. Where it is apt to come from is the issue