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Trading Technology

02:30 PM
Interview By Greg MacSweeney
Interview By Greg MacSweeney
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Web 2.0 and Data Privacy Will Define Financial Services in 2007, Says Steve Rapp, SVP & CIO, Nicholas Applegate.

The move to further protect client data and the maturation of Web 2.0-related businesses are two topics that will define financial services in 2007, according to Steve Rapp, senior vice president and CTO at San Diego-based Nicholas Applegate Capital Management.

Q: What will be the event/trend that will define financial services in 2007?

A: Steve Rapp, Nicholas Applegate: We will begin to see the emergence of Web 2.0 firms as legitimate businesses. For instance, the flexibility of Web 2.0 application development should improve the attractiveness of many application service providers [ASPs] so they can deliver rich applications through a Web-based tool. We will also see the continued growth in hedge fund firms and, more specifically, the traditional money managers will continue to offer more hedge-like products.

And we will also see a focus on protecting client data. We have seen some pretty scary stuff in 2006 when it comes to lost data. Naturally, we are looking to strengthen our security, and we are piloting two-factor authentication. We like the Secure ID from RSA Security. This can be used very easily by end users.

Q: Do you think we will see more privacy/security legislation or even federal legislation?

A: I think it will continue with state-level legislation. It will [take] longer at the federal level.

Q: How will Web 2.0 change financial services in 2007? Where will we see the first evidence that Web 2.0 has impacted business strategy?

A: One example is KnowNow. They have an e-based publish/subscribe solution that connects applications and services in real time. One of the products allows businesses to become event driven, which allows them to leverage real-time information and reduce latency and operating costs. They partnered with a couple of other firms ... and have automated futures and options trading at NYMEX using tablet PCs. Systems like those will become attractive to businesses that are seeking speed of execution and information delivery.

Q: Do you see any similarities in today's Web 2.0 market to the Internet bubble of the late '90s?

A: Businesses today are not looking at the number of eyeballs or the number of clicks to build a business plan. Now businesses are looking at real-world software and product that has been sold to real businesses, and there is real revenue. It is similar to the '90s in the sense that there are companies trying to make a living on the Internet.

Q: What will be Nicholas Applegate's major technology projects in 2007?

A: We are still looking to replace our homegrown trading platform and portfolio management platform. We are working with a vendor that we purchased our compliance engine from, and at the time we did that we worked in some favorable pricing to buy their trading and portfolio management products once they became more mature and once we were ready. We are piloting those products now, and we will roll it out in early 2007. Our homegrown system is perfectly functional, but our philosophy is to move off of homegrown applications and move to vendor-provided offerings so the vendor can worry about compliance concerns and enhancing the systems.

Q: What is in most demand when it comes to IT? What skill sets are you searching for?

A: The skill that is most in demand is the ability to handle derivative products, such as swaps, credit default swaps and currency futures. With the emergence of the more esoteric investment types and the need to handle those well, we are getting more demand from our business users. We are also looking for business analysts and for people who have a business orientation who can perform in leadership roles. Also, something that is new here is the need to manage vendor relationships, because we traditionally have had a lot of in-house development.

10 Critical Business Technology Issues for The Street
In 2007, firms will face the daunting full rollout of Reg NMS in the U.S. and the likely beginning of MiFID implementation in Europe while they continue to struggle with data privacy, OTC derivatives, a shortage of talent and the potential of Web 2.0, among other challenges. more...

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