Hackers go after Citibank ATMs

Jim Kim — Thu, 03 Jul 2008 12:39:57 -0400

The feds have broken up a ring of hacker-thieves who found an electronic way into Citibank's automated teller machines at 7-Eleven stores. They stole at least $2 million before they were shut down. According to Minyanville, the hackers apparently exploited the Windows operating system, which runs the ATMs. They "may have gained 'administrative access' to the ATM machines through a network flaw or by cracking system passwords. The crooks also could have installed rogue software on the main computer to capture unencrypted PINs." Cardtronics actually owns the ATMs, with Fiserv apparently handling operations. While exploiting Windows is a time-honored hackers tactic, the scam has the hallmarks of an insider helping the crooks.

For more:
- here's the article

Electronic tools fuel oil trading

Jim Kim — Thu, 03 Jul 2008 09:42:21 -0400

We've noted often that options trading is following a developmental path very similar to that of equities trading. The same can now be said for futures trading. When it comes to trading, if you build it, they will come. Technology may not be responsible for the recent heightened liquidity and volatility, but it sure has abetted it. The New York Mercantile Exchange and the Intercontinental Exchange, for example, have embraced electronic trading. Volume has soared on both, Financial News Online notes. We're seeing the development of faster trading systems, some of which require co-located facilities and more sophisticated algorithms. Some, however, get by with instant messaging and telephones. We're also seeing moves that recall the days before dark-pool trading took off in the equities market. Interesting stuff.

For more:
- here's the article from Financial News Online

Internal risk metrics to be big business?

Jim Kim — Thu, 03 Jul 2008 09:41:16 -0400

As if you haven't already heard this: Risk management and transparency are going to be big issues this year. These are two of the few areas where IT budgets might actually grow, which present a big opportunity for vendors. The push is coming from all levels, regulators, credit rating agencies, shareholders and customers. Ever aware of the marketing opportunity, Accenture executives make clear that "the era of relying on others, such as rating agency analysts, to make your judgments is over." Banks are going to increasingly have to analyze risk-related issues on their own, which means they'll be forced to have to invest in IT and in the knowledge to develop and produce new models and metrics. The ones that do this well might realize some business benefits--not unlike a good Sarbanes-Oxley deployment.

For more:
- here's some commentary in Bank Systems & Technology

Related Article:
Tools and tips for enterprise risk management

So it wasn't a computer glitch after all

Jim Kim — Thu, 03 Jul 2008 09:40:37 -0400

Not too long ago, it was widely reported that a coding error caused ratings models at Moody's to assign inflated ratings to some constant proportion collateralized debt obligations in Europe. At the time, we noted that it's all too easy to blame the programmers. We also wondered what level of human override was built into the system. Well, an internal investigation at Moody's has found it wasn't a coding problem. It was employees who apparently violated internal rules that required analysts to evaluate only credit issues, not "the potential impact on Moody's, or an issuer, an investor or other market participant." Obviously, it looks like analysts succumbed to pressure to give high ratings. The glitch thing was a smoke screen.

For more:
- here's a New York Times article

LiquidNet calls for more linkages between exchanges and ATSs; Fidelity's new CIO;

Jim Kim — Thu, 03 Jul 2008 09:39:09 -0400

> Liquidnet calls for more linkages between exchanges and ATSs. Article
> Barclays offers free e-security software. Article
> TSE to upgrade systems. Article
> Fidelity's new CIO. Article
> NYSE Euronext in accord with Philippine Stock Exchange. Article
> Dubai to adopt Nasdaq OMX platform. Article
> Visa upgrades contactless payment platform to new standard. Article
> SunGard buys Delphi Technologies. Article
> More on new dark pools in Europe. Article

And Finally... Firefox vulnerabilities emerge. Article

Liquidnet to go public

Jim Kim — Thu, 03 Jul 2008 09:37:58 -0400

The well-regarded electronic trading platform that offers access to more than 20 dark pools has filed to raise $500 million via an IPO. The move bespeaks a lot of confidence, given current market conditions. The company will not receive any of the proceeds; investors will cash out. Article

Buyside embraces TCA

Jim Kim — Fri, 27 Jun 2008 12:17:34 -0400

Advanced Trading weighs in with an article on the buyside's growing acceptance of transaction cost analysis (TCA). The analogy with algorithmic trading is apt. At first, traders were skeptical--even antagonistic--toward the idea of algo trading. But time eroded that. Similarly, TCA may have been viewed initially as an intrusive tool that management was using to monitor employees. But as the functionality develops, acceptance seems to be following. The TABB Group predicts the use of equity post-trade TCA will hit 90 percent by 2009. The main application still seems to be monitoring the effectiveness of traders. But there are more customized applications being rolled out that deal with trading strategy and cross asset-class analytics. It also can act as something of a bridge between portfolio managers and traders.

For more:
- here's the Advanced Trading article

Can SAP make a splash via core conversions?

Jim Kim — Fri, 27 Jun 2008 12:16:53 -0400

We noted recently that more banks are facing the prospect of overhauling their core systems--the main IT system on which most of their most critical apps run. For one big-name brand in the business, this could be a path to glory. SAP has been selected by Canada's ATB Financial for a core conversion, notes Bank Technology News. The choice of SAP was something of a surprise. The article says, "SAP doesn't get much respect in North American banking circles." It is considered too "old world" and "unskilled with the regulatory environment." But the German giant would like to change all that, and the ATB engagement is its ticket. SAP has inked a few others for core conversions as well. Of course, it is aiming for the U.S., where it will face skepticism. There will be plenty of competition from IBM and others.

For more:
- here's the article