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Data Management

02:15 PM
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Real-Time Risk Reduction Needed in a Fast-Moving Trading World

GAIN Capital adopts real-time analytics to evaluate its liquidity partners and manage under-performers on the fly.

[6 Tips for Avoiding a Data Deluge with Real-Time Analytics Tools.]

If your firm relies solely on traditional business intelligence solutions, it risks being left behind. "Traditional tools take a snapshot," explains Adam Honore, research director for Aite Group. "But the world is moving too fast. If you're not monitoring intraday, you can get caught in all kinds of situations."

Just one example is trade execution, says Honore's colleague Javier Paz, a senior analyst with Boston-based Aite. "If a group of clients, or a particular client, is being rejected, then real-time analytics can help you trace where the problem is located and diagnose the cause," he notes.

Another example is money laundering. "Ideally, you want to see suspicious activity in real time," Paz says. "But such activity is increasingly difficult for the human eye to detect, due to the speed of electronic trading, the influx of data sources and lack of dashboards appropriate for business users."

For GAIN Capital, the real-time challenge came in the form of evaluating liquidity partners. "We wanted a digestible way for business users to see metrics such as the quality of liquidity offers and the velocity of rate changes during normal markets as well as when market events occur," relates Rob Perez, VP of trading and risk management systems at Bedminster, N.J.-based GAIN. "Our BI tools are great for history, and we definitely learn from them. But we struggled with evaluating our liquidity partners in real time."

During the early months of 2011 GAIN considered developing an in-house solution, Perez reports. Shortly after, however, the firm learned that its complex event processing partner, StreamBase (Lexington, Mass.), had engineered a real-time monitoring and analytics solution targeting business users that the vendor intended to take to market. Called StreamBase LiveView, the business intelligence tool was developed in conjunction with a large bank, which StreamBase declines to name.

Since LiveView appeared to offer the features and functionality GAIN desired in a real-time analytics solution, "We agreed to a proof of concept," recalls Perez. "In December 2011 the head of our quantitative analysis group and I developed specifications, which we delivered to StreamBase prior to the Christmas holiday."

A Fast Start

In early January 2012, "We hit the ground running," Perez recounts. "StreamBase came on site for a week to implement LiveView on our existing StreamBase server. During the initial prototyping we received immediate results, but they didn't quite fit."

In response, StreamBase fine-tuned LiveView for about a month until it met GAIN's specifications. "In March we began testing with a larger group of users," comments Perez. "We went through hundreds of thousands of data points and found only small things to remediate."

Still, a few other challenges arose, including the user interface. "This is very early software, so it's not very visually appealing," Perez acknowledges. To overcome this hurdle and speed adoption, StreamBase helped GAIN build several templates for business users to view and work with data, which "has really helped ease the transition," according to Perez. Additionally, a number of functions GAIN expected in the solution weren't yet available, Perez notes. "So we made a list of things that SteamBase has agreed to add," he says.

Regardless, Perez terms the April 2012 rollout a tremendous success. "Everyone is completely onboard and excited about the visual representation of complex information," he says. "We're definitely getting real-time views."

For GAIN, this means data time-stamped down to the millisecond. "We haven't taken it down to the microsecond, yet," Perez says. "There might be just too much data to consume at this time."

Now GAIN evaluates and manages its liquidity partners intraday. "We can see which partners are giving us the best rates and the fastest throughput," reports Perez. "Also, we can decide whether to have a conversation with a particular partner on the fly."

In fact, some under-performers have already received a call, "particularly during market events," says Perez. "As we have more conversations, we anticipate it will help our liquidity partners improve. Eventually, it will make the overall ecosystem more streamlined and efficient."

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio

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