Credit Suisse Relates News to Relationships
With 300 equity analysts around the globe, Credit Suisse and head of equity research Stefano Natella wanted to develop a system that could make connections among news events on a specific company and the other companies affected by the news. For example, if something happens to a semiconductor company in Taiwan that impacts Intel, the Credit Suisse analyst in Taiwan might learn about it ahead of the U.S. analyst, relates Natella.
To solve the problem, after interviewing several solutions providers, Credit Suisse teamed with Relegence, a real-time search and news engine company that scours thousands of Web sites and newswires, often getting the news ahead of Reuters and Bloomberg, Natella contends. "What we developed together is a system that automatically filters all the news out in the market and our internal research according to the relationships between the different companies that have been mapped out by our analysts," says Natella.
The result is Relegence Connect, a product that maps relationships among companies, including customers, suppliers, competitors, equity investors and partners, for about 2,400 firms. Relegence Connect tracks news from more than 18,000 sources, alerting users instantly on news that is relevant to a company they are watching. If news on Intel breaks, for example, then, "You can instantly see the 20 companies that are relevant to Intel and might also be impacted," says Natella.
Going a step farther, Credit Suisse has tapped the proprietary knowledge of its analysts to indicate the strength of the relationships among different companies and their peers in the food chain. "Making trading decisions based on news is more an art than a science because you have to apply a judgment," Natella notes. "Relegence Connect helps analysts and traders make highly informed decisions by identifying all of the possible implications of a news event that might not be immediately evident."
In the past, traders either had this information in their heads or had to call an analyst to get it, relates Relegence founder and CTO Edo Segal, who stresses that Relegence Connect automates the process. For instance, if General Motors were going bankrupt, the trader or analyst would get a bankruptcy signal from Relegence Connect, which also knows that American Axle & Manufacturing Holdings is a key GM supplier that derives 78 percent of its revenues from GM, explains Segal. It may take 50 minutes for the market to digest that information, but Relegence Connect will send out a signal on Axle in real time, he asserts.
Credit Suisse analysts and traders currently use the product internally, and the firm plans to offer the product to its buy-side institutional clients, according to Natella, who notes that 20 institutional accounts already use the product.Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio