Wall Street & Technology: Blog

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We checked in yesterday with former Wachovia IT wunderkind Tony Bishop, who led a three year IT re-architecture effort at the firm (you can read about some of his work here). Last fall, Bishop, then a Wachovia senior vice president, took 15 of his staff and left to start his own consulting firm, called Adaptivity.

Intrigued by Vhayu’s announcement of a complex event processing tool geared toward quant researchers, yesterday I looked at this software. It gives quants a means to look for patterns, test ideas and strategies and run what-if scenarios against massive volumes of real-time and historical tick data. It combines some of the features of mathematical algorithmic modeling tools (such as Numerix and Algorithmics) with a fast historical and real-time tick database (a la Vhayu, Kx) with a front-end complex event processing graphical user interface (in the vein of Progress Apama, Streambase or Coral8).

The sophistication of increasingly widespread fraudulent techniques such as Man-in-the-Browser attacks are forcing financial institutions to re-assess how they fight electronic fraud.

For those on board the advancing trend on Wall Street to virtualize data centers and computing in general, the announcement from Violin and FalconStor this week, that they are offering a virtual storage server bundled with a fast memory appliance, should be interesting. The companies say that for $300 per gigabtye, their storage servers and memory units can stream data at speeds of two gigabytes per second and beyond, accelerating applications 10 to 50 times, while providing the benefits of virtualized storage.

In the midst of this quarter's write-downs, layoffs and earnings disappointments, wealth management clearly remains a bright, profitable star on Wall Street -- in Merrill Lynch, for instance, wealth management was most strongly profitable unit this quarter and financial advisors have been promised they will be spared from the upcoming layoffs. In an interesting trend, more wealth management dollars are moving into socially aware investing. According to the Social Investment Forum, socially responsible investing assets in the U.S surged 18% from 2005 to 2007, outpacing broader managed assets. Although this research focused on institutional investors, retail investors are following the same pattern, at least according to Bill Crager, president of Envestnet. He should know; his firm's platform for financial advisors, which is used by 400 broker/dealers, beta tested a socially aware investment vehicle with a handful of small investment firms and attracted $300 million in six months.

Aite Group recently asked a group of 505 U.S. baby boomers (251 pre-retirees and 254 recently retired) how they like to receive brokerage financial statements and prospectuses and to what extent they would like these to be paperless. Surprisingly, they're not as willing to forego paper as one might expect in these carbon-footprint-conscious times.

Salesforce.com's Tour de Force event this morning was the closest I've ever come to attending a spiritual revival like the ones on TV. There was loud pop music, a charismatic and telegenic leader (CEO Marc Benioff) with a strong and clear if narrow-minded message (which is: utility or cloud computing is the future path for all business applications, preferably hosted on Salesforce.com's servers and software platform), dazzled audience members obediently yet enthusiastically nodding and clapping, and devoted followers summoned up on stage to share their conversion stories.

In the aftermath of the clamorous Soc Gen scandal , FINRA has issued guidance to financial firms outlining best practices for detecting and preventing rogue trading.

FINRA CEO Mary L. Schapiro pointed out that while rogue trading isn't new, pervasive elctronic trading and market lingages have increased pressure on some firms to relax internal controls.

I had lunch with Bob Gach, global managing director capital markets at Accenture, last week. We chatted about a number of topics but one of the most interesting was Wall Street ‘s quest for sustainable cost reduction. With the current U.S. economic downturn, investment banks are looking to cut costs but they are also looking to sustain the IT operating model through bull and bear markets without going through dramatic swings. Now that we might be in a recession, the idea is to manage IT efficiently and holistically across the organization rather than cutting costs in one department vs. another. To learn more about how to achieve sustainable cost reduction, please click here.

If yours is like many Wall Street firms, you'd like to upgrade the one-gigabit Ethernet networks in your data centers to speed up applications, but you're not sure you want to make the leap to an exotic alternative like Infiniband or Fibre Channel. Startup company Teak Technologies offers a radically different idea: replace your end-of-row network switches with a layer of small, local switches that fit directly into racks or blades and, according to Teak, can accelerate an Ethernet network, save money and simplify network management.

During the weeks leading up to April 15th, firms often kick up their marketing efforts around IRAs and retirement planning. Thus, it is not surprising that in the past few months, we’ve noticed several firms introduce new tools directly retirement savings: a new Retirement Savings Quiz and Retirement Calculator from Bank of America, Charles Schwab’s new Retirement Savings Calculator and most recently, E*TRADE Financial’s new Retirement QuickPlan.

You know markets are suffering when the latest new features vendors tout for their products have to do with liquidation pricing. This morning, SuperDerivatives announced it will provide the liquidation price (or ’exit price’) of all derivatives held within clients’ portfolios. Under the terms of FAS 157, firms are required to define the exit price of all instruments to calculate fair market value or "…the price that would be received to sell an asset or paid to transfer a liability."

Now that JPMorgan has announced that Peter Cherasia, head of global technology and operations at Bear Stearns, will stay on to manage technology, operations and real estate worldwide for JPMorgan's investment bank, he and the other surviving IT managers have a job ahead of them to merge the technology and operations of the two behemoth firms.

La plus ca change, la plus c'est la meme chose -- when I mix my eighth-grade-level French with a report the Aite Group released this morning on buy-side OTC derivatives processing, this is what I come up with. As we reported last summer, sell-side firms (with a major push from the Fed) are working hard to automate derivatives processing; but buy-side firms are not.

Over the last month and a half, a slew of vendors have introduced trade data latency monitoring tools, to help exchanges, brokerage houses and buy-side firms find, detect and eliminate the causes of trade data delays.

Broadridge last night unveiled the first four of a set of 16 new retail brokerage operations applications designed to automatically handle most operations tasks and route only the discrepancies to operations staff, giving them the tools to quickly research and resolve them. The four initial Ascendis applications, all based on Microsoft ASP.net and BizTalk, automate credit risk administration, corporate actions, balancing and reconciliation and dividends distribution.

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