Fintech – News and Analysis

IDF isn’t for the faint-hearted — this is a real developers conference, although some of the Intel executive keynotes are fairly general and discuss industry directions, future impacts and a lot of gee-whiz stuff…A lot of the content looks out 2-5 years and can be pretty valuable, well to some people, at least. I’ve gotten some pretty good stories directly from IDF and some very useful background that I drew on for several years as the technology eventually took root.

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YarcData Inc., a Cray company that is focused on providing “Big Data” graph analytics solutions to enterprise customers, today announced the official start of the YarcData Graph Analytics Challenge, which features $100,000 in prizes. Announced earlier this month, the YarcData Graph Analytics Challenge will recognize the best submissions for un-partitionable, Big Data graph problems as determined by the panel of judges.

The contest is now officially open, and contestants can review contest rules and submission criteria at http://yarcdata.com/graph-analytic-challenge.html and submit entries. The grand prize for the first place winner is $70,000. The second place winner will receive $13,000 and the third place winner will receive $8,000. There will also be prizes for the other finalists.

YarcData is holding the contest to showcase the increasing applicability and adoption of graph analytics in solving Big Data problems, and also to promote the use and development of RDF and SPARQL as the industry standard for graph analytics.

“This is an exciting chance to tap the creativity of the community to get past the misconception that graph computing is only about charting social tribes,” said Tony Baer, principal analyst at Ovum Research. “In actuality there are a host of complex problems across private and public sectors, driven by many-to-many relationships that have defied solution through conventional means. Competitions are a great way of showing that the solutions are real.”

“Critical problems today, including eScience, Social Media and Open Government Systems, are becoming more and more dependent on interacting with and understanding the relationships in the emerging Web of Data — which is basically a graph made by linking the data together,” added Jim Hendler, professor of computer science at the Rensselaer Polytechnic Institute. “The maturing standards of RDF and SPARQL provide an effective way of handling these emerging data graphs, especially if they can be processed at Web Scales.”

“We believe RDF/SPARQL will be to graph analytics what SQL is to relational databases,” said Arvind Parthasarathi, President of YarcData.

The top six submissions will be selected on Sept.15, 2012, and the finalists will be offered time on YarcData’s uRiKA graph analytics appliance to run their queries. Winning submissions will be selected based on a set of criteria that includes the business and/or human impact, complexity, scalability and performance, and innovation.  Winners will be announced in a live web event on Dec. 6, 2012.

The contest will be open only to those individuals who are eligible to participate under U.S. and other applicable laws and regulations and whose submissions are in compliance with the contest rules. For more information, please visit http://yarcdata.com/graph-analytic-challenge.html.

A survey of institutional investors and members of corporate finance departments by EDHEC-Risk Institute shows that the issuance of inflation-linked bonds may provide a solution to both corporations and institutional investors.  For investors, inflation-linked corporate debt could be an ideal instrument for hedging their liabilities at a time when sovereign debt is no longer considered the default asset for pension funds’ asset-liability management. 

For corporations, issuing inflation-linked debt would ultimately limit the firm’s risk and increase the value of its shares.

Overall, the responses reflect strong agreement with many of EDHEC-Risk Institute’s key propositions, and the central tenet of the paper: that for many firms, current debt-management practices can be improved through the issuance of inflation-linked debt.

For more info, see:

Reactions to the EDHEC Study “Optimal Design of Corporate Market Debt Programmes in the Presence of Interest-Rate and Inflation Risk.”

Sybase 365 and Neurosoft Technologies havey announced that ONE Bank Limited (OBL), a private commercial bank in Bangladesh, has selected the Sybase 365 Mobile Commerce platform to deliver end-to-end mobile banking services to its customers. With the partnership, OBL will introduce its branchless banking initiative enabling customers to have full control of their bank accounts and perform transactions through their mobile phones regardless of their location.

“We have reviewed various mobile solutions for our branchless banking initiative and it was clear that Sybase 365 is the market leader,” said Adil Raihan, executive vice president, at ONE Bank Limited. “With its global reach and proven expertise, Sybase 365 can deliver solutions that meet our scalability and interoperability requirements. We are confident this partnership will deliver a complete banking experience to our customers even in rural areas catering to the unbanked and under-banked population of Bangladesh.”

There are around 160 million people in Bangladesh, of which, only 13 percent have bank accounts. OBL will capitalize on the vast market potential, which includes serving customers in remote areas where access to physical banks remains a challenge and Internet infrastructure continues to be nascent. Sybase 365 and Neurosoft Technologies will facilitate this deployment, helping OBL further expand its market by connecting with approximately 84 million mobile users in Bangladesh, 45 percent of whom represent the country’s rural and unbanked population.

“Bangladesh is one of the fastest developing markets for branchless-banking in the world, and the OBL launch will create opportunities for bringing more unbanked segments of the society into the financial network.  Services available include opening of a bank account, cash withdrawal and depositing of money, as well as receiving remittances,” said Matthew Talbot, senior vice president, mCommerce at Sybase 365. “Sybase 365 continues to build on the mobile banking momentum we have helped establish in Bangladesh.”

OBL’s move into offer mobile banking reaffirms the bank’s commitment in providing banking facilities to rural communities to accelerate the pace of building Digital Bangladesh as charted out in the Bangladeshi government’s Vision 2012. This includes initiatives to provide the country’s rural population with banking services, helping them develop their lives and livelihood.

Perseus Telecom, global provider of enterprise and financial telecommunications, announced today the Global Telecoms Business 2012 Innovation Award for Financial Network Innovation has been presented to Perseus Telecom and partner GlobeNet. 

The accolade recognises the fastest available trading connection to Brazil’s BM&FBOVESPA Exchange from New York’s NASDAQ, which Perseus also routes to major global exchanges such as the CME, NYSE, BATS, LSE, Deutsche Börse and Eurex. Trading firms looking to leverage liquidity, arbitrage and hedging opportunities are able to connect simply to Brazil whilst solving the industry conundrum of multiple hop delays and capitalising on time sensitive geared algorithms. 

“Providing the express route to Brazil has broadened the horizons of opportunities for trading firms looking to increase exposure to Latin America,” said  Dr. Jock Percy, chief executive of Perseus Telecom. “We are, and will continue to be, extremely sensitive to the needs of the ultra-low latency trading community.”

“We choose Perseus Telecom for a long term partnership for seamless and fast connectivity coming in and out of Brazil for us and our customers,” says Amanda Altobello, head of the electronic trading desk at Alpes. “Alpes and Perseus Telecom join forces to bring innovation and flexibility, while opening up trading in Latin America to the world; we are happy to be a part of this important award!”

Numerix , a leading provider of cross-asset analytics for derivatives valuations and risk management has announced a partnership with GreenButton to provide Numerix clients with, secure, on-demand access to cloud computing resources. 

With Numerix CrossAsset XL, a flexible Microsoft Excel-based platform for pricing derivatives or structured products, clients can offload their compute-intensive calculations to any cloud provider including Microsoft Windows Azure through GreenButton’s intuitive interface.  End users can now immediately leverage cost effective cloud resources to respond to market dynamics and regulatory pressures with consistent and more timely analytics.

Regulatory pressures and business requirements demand that both buy-side and sell-side firms generate faster, more frequent and accurate pricing and risk analysis.  At the same time, firms need to assess trading and risk management decisions from a consistent, enterprise-wide, cross-asset point of view. Together these factors combine to necessitate a myriad of increasingly complex and compute intensive pricing and risk calculations. Thus many firms, particularly hedge funds, asset managers and insurance companies, are now in need of customizable cloud-based solutions to meet their unique business requirements and demand for more compute power.

“Though budgets for IT infrastructure continue to shrink on both the buy- and sell-side the pressure to arrive at the right answer faster from a trading and risk perspective has only increased,” said Steve O’Hanlon, president and COO of Numerix. “Numerix made a strategic business decision several years ago to lead the industry in its evolution towards cloud-based solutions by delivering flexible offerings that enable our clients to confidently tap the power of private, public and hybrid clouds such as Windows HPC and Azure. Our partnership with GreenButton is an ideal complement to our cloud enablement strategy. It combines our best-of-breed analytics with the most innovative, easy to use on-ramp to the cloud, ultimately lowering total cost of ownership (TCO), boosting productivity and empowering more granular analysis for our clients. ”

Mantara, Inc., a provider of advanced ultra-low latency trading solutions, has acquired UNX, a supplier of innovative broker-neutral EMS technology. High-frequency traders and others can now benefit from access to an open and flexible EMS coupled with Mantara’s flagship pre-trade risk functionality and ultra-low latency direct market access.

 UNX’s Catalyst^® execution management system, provides an open, scalable broker-neutral EMS and electronic trading platform that streamlines trader workflow with seamless access to its companion Marketplace that hosts diversified products and services from 3rd-party vendors, information providers, exchanges, ATSs, and broker-dealers.  

Designed for flexibility, performance and usability, Catalyst’s open-API framework delivers a fully extensible and customizable desktop trading environment. Its powerful front end enables traders to extend their capabilities and easily customize or create functionality to achieve trading objectives and execute strategies. The Marketplace provides a virtual financial apps store for research, news and media feeds, and trading tools, algorithms, order routing and analytics from brokerages and investment banks.

The purchase comes amidst an industry-wide trend towards independent, cost-effective, broker-neutral, cloud solutions that can be rapidly deployed and provide flexibility, ease-of-customization and help to reduce trading costs. Mantara takes this trend one step forward and incorporates the demand for high performance as a key requirement for traders today. 

Tabb Group’s Director of Research, Adam Sussman, commented on the news, “Financial institutions are finding it harder than ever to be first to the market, both in terms of low-latency solutions but also how long it takes to deploy. Institutions need an infrastructure that lets them respond to market dynamics, regulatory intervention and client demands more quickly than ever, developments like Mantara’s aim to do that.”  

Known for its ultra-low latency expressWay™ infrastructure, Mantara has gained strong support across the high-frequency trading community with its comprehensive pre-trade risk offering experiencing rising popularity among market participants looking to meet recent and anticipated pre-trade regulatory requirements and manage risk across multiple trading venues.  

“Driven by client demand for a next generation EMS coupled with our state-of-the-art risk system, we sought technology based on a shared philosophy,” said Mantara President and CEO, Michael Chin.  “UNX’s innovative Catalyst suite shares the same guiding principles underlying our ultra-low latency technology.”   

Mantara and UNX share strong product and client synergies, delivering independent, broker-neutral software-as-a-service solutions, based on intuitive, easily deployable, open and flexible technology. The shared client base represents a solid balance of broker-dealers, hedge funds and propriety traders committed to implementing next-generation, customizable solutions that leverage the latest technology advancements.   

Vista Equity Partners announced it has completed its acquisition of Misys. As part of this acquisition, Misys and Turaz, the business that includes the Kondor+ product line, are now one company officially operating as one under the name “Misys”.  

By combining these two award-winning enterprise software companies, the new Misys will offer its customers access to an unrivalled pool of expertise and domain knowledge, in combination with the most comprehensive portfolio of software solutions available on the market today.  As the trusted provider to 1,800 customers in 120 countries and with the broadest solution suite available, Misys has the scale and ability to serve customer’s capital markets and banking needs across all geographies and market segments. 

The new Misys is uniquely positioned to help customers address the complex problems that banks and financial institutions encounter across the entire breadth and depth of their banking and trading book. Leveraging the combined strength of these two organizations, customers will be able to realise the value of an extended and aligned solution set, improved customer focus, increased capabilities, and extended team capacity. 

“The financial services industry has gone through considerable change in the last few years, with growing pressure on financial institutions to be more transparent, manage risk more effectively and serve their customers better,” states the newly appointed Misys CEO, Bret Bolin. “Our clients are focused on making sure their businesses are operating as efficiently as possible while still maintaining their competitive edge. Misys is unique in its ability to help banks of all sizes look at their organisation’s most complex problems at both an enterprise as well as a granular level.  By combining Misys with Turaz the new organisation will stand out from the crowd in terms of both the breadth and completeness of coverage across banking, and sell-side and buy-side institutions.”

Cubillas Ding, Research Director at Celent, adds, “In an environment where change is rapid and budgetary constraints are real, firms that we observe are successful in pushing IT budgets further and taking costs out of the business are pursuing paths to consolidate applications, reduce integration costs, and rationalize supplier relationships in order to drive higher efficiencies and manage the excessive costs of complexity. Firms that draw on technology-enabled delivery models, executed in an agile, flexible and timely manner and have the broadest product footprint across both the banking and trading book are likely to emerge as early winners.”

James Gardner, who is head of innovation and research at Lloyds TSB (See my story on him in Banking Technology is back in action with his innovation blog.

“Here’s the key idea: innovation needs not only a nice process to get things through a pipeline, it needs a set of tools that can forecast the likely shape of things to come and then optimise the innovation process accordingly. I make the point throughout that the innovation process  is itself a disruptive innovation in a bank. The degree to which it is successful is correlated with how well such processes are able to anticipate, and the book talks about how that can be done. It’s always surprised me how few innovation teams I’ve talked to in banks actually operationalise the process of thinking about what’s coming up.”

Confused about modern art? Intimidated by the beautiful young women sitting at the front desks of the all-white contemporary art galleries from New York to London? (See Peter Mayes’ mystery “Chasing Cezanne” for a hilarious account of the art world).

Don Thompson, who teaches marketing and economics in Toronto, London and Boston offers reassurance based on a year of research into the art market which he has turned into a book, “The $12 million stuffed Shark,” a reference to a Damien Hirst shark resold by London adman Charles Saatchi to Greenwich (CT) hedgie Steve Cohen.  This is an excellent combination of smart reporting with questions informed by a background in business and economics. Tired of trying to reach through long-winded tomes on the aesthetics of contemporary art? Here’s a welcome and information respite.

You can’t understand, or plain can’t stand, most of what you see? He finds that experts in the field of contemporary art think 85 percent of it is crap – they just argue over which 85 percent.

Whew. I was wondering if I was alone in skipping gallery after gallery in the big art warehouses in New York’s Chelsea. After a quick glance through the doors of most, I move on without ever entering.  What’s changed in the last decade is the location – I used to do this in Soho with a pretty visually sophisticated friend. I mean, she got weekly manicures and everything. We kept wondering what was wrong.

That intimidating receptionist? Apt to be an art grad whose father is a collector and got her the job. And the gallery? Four out of five contemporary art galleries close within five years, and 10 percent of more established galleries also go out of business. Only one artist out of 200 will ever get their work into the auctions at Christie’s or Sotheby’s. Thompson says London and New York each have 40,000 artists. Of those, 25 are superstars and about 300 are making a decent living. Whew…how do art schools ever persuade student to spend a couple of years and pay tuition to do it?

That puts a lot of the art world in perspective.

Still, the market is active. More than 100 museums have opened in the last 25 years, and each will want to acquire at least 2,000 works of art. Then again, with 40,000 artists in just two art capitals (And where is Paris in this equation? Good question. No mention of the Chinese villages which churn out copies or the growing leagues of accomplished Chinese painters – maybe in the sequel.)

Thompson shows how the art world overlaps with finance, although any reader of artinfo.com will know at least some of this.  Steve Cohen, of hedge fund fame, not only buys a lot of art, he provides auction house with insurance – a hedge – against the guarantees they offer major sellers. (see p. 137) Thompson wonders if traders like Cohen will try to time the art market – an intriguing point.

Despite some occasional attempts to regulate the market (auction houses do now have to say when a piece doesn’t sell) the auctions and dealerships pretty much run their own world as regulators fear that stiffer laws will send the business abroad. (For example, the Maastricht fair is a major event, but most of the deals are actually concluded afterwards, in countries that impose lighter tax burdens than the Netherlands.)

“The auction market, as one commentator described it, is a place where consenting adults can indulge in irrational private acts.”

Contemporary art is, or was, a fast-growing market.  In one auction, Thompson notes, a Francis Bacon painting at £5.5 million would have paid for two Monets, one Pissarro and a Cezanne auctioned the night before. Meanwhile, in an effort to beat the two top houses, Phillips de Pury has focused on contemporary art and sold more 21st century art that the other two houses combined.

Think these financiers who buy art are so smart? Thompson says that a Jeff Koons piece which brought $4 million at Sotheby’s in November 2006 could have been picked up from a dealer a few blocks away for $2.25 million.

The art market is in furious flux, with art fairs one of the weapons that dealers use against the auction houses. “In 2008 there were 2005 relatively major art fairs scheduled around the world, compared to 55 in 2001.” He has a great description of the way fairs work, with best buyers allowed in early. On opening night half the important work will sell in the first 30 minutes, and half of that in the first 15. Art Basel Miami Beach has become one of the biggest fairs in the world in just a few years, and it is sponsored by UBS. Thompson notes that 5,000 of the wealthiest people in America winter in Florida – which might account for some of its success. (See http://www.artinfo.com for coverage – I wrote about the photography and design satellite shows on artinfo two years ago and had a great time at the fair.) One result of the busy schedule is that artists don’t have time to be original – they have to churn out new work for their galleries and it can be repetitive.

He wonders whether auction houses will replace the dealers, since they can offer higher prices and lower commissions.

Does art make sense as an investment? No. “Eighty percent of the art bought from local dealers and local art fairs will never resell for as much as the original purchase price.”

“In the overwhelming majors of cases, art is neither a good investment nor an efficient investment vehicle.”

Fewer than half the modern and contemporary artists in a Christie’s or Sotheby’s auction catalogue 25 years ago are still offered at any major auction, says Thompson.

The book runs out of steam near the end. Thompson places Thomas Hoving at MOMA – he was at the Met, and he doesn’t probe the economics of museums in much depth. Still, he has interesting anecdotes. The Neue Gallerie in New York went from 800 visitors a day to 6,000 after Ron Lauder paid a reported $135 million for a Klimt painting.

While I can’t claim comprehensive knowledge of art books published in the last year, I would hazard a guess that this is one of the clearer explanations of what goes on in the world of studios, galleries and museums. Artinfo ran an interesting interview with Thompson on his predictions for the art market that is pretty interesting.