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Although damaged cables under the Mediterranean Sea shut down or severely slowed down internet service today across India, Egypt and the Middle East, Wall Street firms with IT staff and outsourcing projects in India seem to have been been well served by their network backups.

While most large financial institution firms plan to rely on telecommuting in the case of a pandemic - new results of a financial industry drill show that few employees actually did telecommute at all.

In the past few weeks, State Street, Legg Mason, TD Asset Management, Bear Stearns and other asset management firms have introduced new 130/30 funds; all told, about 140 of these funds exist today. But Colin Bugler, director of prime brokerage for RBC Capital Markets, says these asset managers will face intense competition and will need to ramp up their technology infrastructure, particularly those who are new to the business of shorting stock. (To short a stock is to borrow shares from a broker and sell them to another buyer, with the obligation to buy the shares back at some point in time and return them to the lender. It's a bet that a stock's value will drop, enabling you to buy it back at a cheaper price, while having already pocketed the profit from the original sale at the higher price.)

Jerome Kerviel, the Societe Generale trader who allegedly carried out a $7.2 billion fraud, confessed to police that he hid his activities from his superiors, and claimed both he and other employees had been carrying out risky trades since 2005. So how could Soc Gen have prevented the fraud?

Toronto-based First Coverage is adding real-time quote feeds from global exchanges to its Web-based software, allowing the buy-side to further quantify the value of trading ideas and other research they are getting from the sell-side.

Are you curious about the characteristics and behavior of online options traders? This week Chicago-based OptionsHouse, an online retail and institutional brokerage house, rolled out the results of its first annual survey and it found that 91 percent of options traders are men and that 57 percent are between the ages of 45 and 54 years of age. They are also educated —76 percent are college graduates, while 32 percent have graduate degrees.

France's second biggest bank, Societe Generale, is reeling from the discovery of a $7.14 billion fraud committed in 2007 and 2008 by Jerome Kerviel, a trader working on the futures desk at the bank's headquarters in Paris. So how did such massive fraud happen and lie undetected for so long?

One of my favorite movies is A Christmas Story featuring Peter Billingsly. It takes place in the early 40s and highlights the main character's trials and tribulations leading up to Christmas. One of the sub-plots is his desire to get a decoder ring for his favorite radio show, Little Orphan Annie. He finally gets it and it’s a little brass wheel that has 26 numbers corresponding to the letters of the alphabet. He's disappointed when he decodes his first message, which turns out to be an ad: "Remember to drink your Ovaltine." We were reminded of this when we received our new Passcard from Interactive Brokers.

Who doesn't want to make their data centers more cost-effective? When we asked sell-side firms recently where in IT they would most increase spending in 2008, 82.4 percent said "data center infrastructure" -- this ranked far above any other item on our list. That's why we thought we share with you some highlights of a report Intel released this week that details how it avoided spending $30 million on its data centers in 2007 and how it plans to achieve nominal cost savings of $1 billion over the course of eight years.

As one of Wall Street's most far-reaching cases of insider trading continues to unravel, a former employee of Hoboken, NJ-based brokerage firm Assent has pleaded guilty to conspiracy, after admitting he accepted bribes to conceal illegal trades based on inside information provided by a former employee at UBS.

Hedge fund administrator Columbus Avenue Consulting, LLC, selected the Super Derivatives Credit derivatives platform, SD-CD, to price its hedge fund clients’ portfolios of credit default swaps.
The decision points to a growing demand for independent valuation sources, as hedge fund portfolios are hedging or placing bets on the fixed-income market using credit default swaps or indexes.

The acquisition of the American Exchange by NYSE Euronext represents the end of one of the largest lost opportunities and disappointments on the exchange front as well as the beginning of a new opportunity for the NYSE.

A security expert says financial institutions must adopt a strong multi-factor security solution, which can protect them from all kinds of online attacks and do not need to be re-written when a new threat is identified.

For all their benefits (including reusability and flexibility), one downside of services-oriented architecture is the painstaking work of knitting together reams of web services every time you want to build a new application. Xignite yesterday introduced for its customers a simple platform for mashing or “splicing” web services together, called Splice Studio.

Financial firms say they need to dedicate more resources to their anti-money laundering (AML) programs and focus more on regulatory risk - the risk associated with the potential for laws to change and impact relevant investments, according to a new survey by London, UK-based Ernst & Young.

NYSE Euronext has agreed to pay $200 million in cash to acquire Wombat Financial Software, a leader in low-latency trading, data messaging and market data management solutions. The transaction, which is expected to close early in the second quarter of 2008, moves NYSE Euronext more deeply into the market data business and could allow it to marry low-latency market data with its transaction services business.

Lime Brokerage has acquired a minority stake in CBOE Stock Exchange, a subsidiary of the Chicago Board Options Exchange (CBOE). The investment was made on Jan. 3, although financial terms of the deal were not disclosed.

"As the need for low latency and the ability to accommodate increasing message volumes migrates to other asset classes beyond equities, how do you deal with that?" asks Sang Lee, managing partner of Aite Group, in explaining the significance of Vhayu's announcement today that it's adding new data feed handlers to its Velocity streaming tick processing software.

Are Wall Street firms going to significantly increase IT spending in the coming year, as a Wall Street & Technology survey conducted last fall indicated, or will the subprime-related losses force those budgets to be slashed? A new report from Celent stakes a conservative middle ground -- it predicts IT spending for North American securities and investment firms in 2008 and 2009 will grow 4% over 2006 and 2007 levels.

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