credit crunch

More on whether Martin Lippert can save Citi

Jim Kim — Wed, 06 Aug 2008 17:03:33 -0400

CEO Vikram Pandit has done a lot of executive tinkering at Citi since he took the reins. Arguably, one of his most important hires was new CIO Martin Lippert, who arrived from the Royal Bank of Canada with a career's worth of experience in systems integration. That made him ideal for the ailing mega-bank. Citi has long been viewed as somewhat behind the curve in terms of its systems, notes Bank Technology News. That certainly came back to bite it in the recent credit crunch: "It blinded Citi to the risks that subprime exposures posed to various areas of the bank, such as its off-book structured-investment vehicles." Lippert is being charged with "transformational" change. The immediate challenges will be costs, however, and perhaps the need to prepare systems for possible sales or spin-offs.

For more:
- here's the article

The rise of alpha generation platforms

Jim Kim — Thu, 17 Jul 2008 08:33:39 -0400

Despite some well-reported fiascoes in ongoing credit crunch, quantitative hedge funds as a group are not going away. Indeed, the search for quantitatively derived alpha is as intense as ever, given the rising competition. This has given rise to what the Aite Group calls Alpha Generation Platforms, which allow for rapid development and deployments of trading apps. Let's face it, a fund has a small window to capitalize on a truly good idea. Within a matter of months, you need the technology in place to back the idea, which goes beyond mere screening of stocks. Aite looks at 4th Story; Alphacet, ClariFI, Deltix and QuantHouse. As Finance Tech notes, they tend to offer integrations with data sources and databases, easy back testing and simulation, easy model creation, visualization tools, easy integrations with other software and the like. Aite expects demand for such platforms to rise to $120 million by the end of 2011, up from $12 million at the end of 2006.

For more:
- here's the Finance Tech article

Related Article:
Are quant funds really dead?

Are more banks ready to turn to SaaS?

Jim Kim — Fri, 20 Jun 2008 10:43:26 -0400

It's no secret that IT budgets at most banks are being squeezed. But that's only going to make the vendors work that much harder for attention. Truth be told, the SaaS vendors can make a pretty good case for their software when it comes to banking. Bluewolf's Randy Rodriguez, managing director of financial services innovation, points to a Forrester Research study that found a 170 percent return on one bank's deployment of Salesforce.com. Forrester says SaaS deployment can help fund other projects. The pitch is that marketing related bank deployments can provide benefits on the customer/marketing side to the compliance side. You've heard this before. It'll be interesting to see if the current credit crunch will lead to more or fewer SaaS deployments.

For more:
- here's the commentary from Rodriguez in Bank Systems & Technology

Related Article:
VCs to take a look at SaaS compliance vendors?

Buyside seeks independent valuations of derivatives

Mon, 05 May 2008 06:59:56 -0400

We've noted the many problems in the credit default swap market, which still doesn't have an automated trading venue. But as Wall Street & Technology makes clear, there are huge markets for derivatives that likewise have no automated clearing mechanism (which of course makes valuations very tricky). In the past, the buy-side relied on the sell-side market makers for prices. But increasingly, they are seeking third-party valuations. Northern Trust began offering an OTC derivatives valuation service three years ago. The bottom line is that hedge funds and others really do not trust their counterparties for valuations in this environment. This strikes me as a decent example of new markets exploding without a sound technology infrastructure in place that can link the entire market. No wonder we're seeing more start ups march into this arena.

For more:
- here's the Wall Street & Technology article

Quant funds at a crossroads

Mon, 28 Apr 2008 06:59:55 -0400

The rise of lower-cost IT systems has been a huge boon to the many quantitative hedge funds and quant system providers out there. The credit crunch has led to a bit of handwringing over the future of quant funds. The issue appears to boil down to whether technology can overcome the drawbacks. In a column, the founder of the Aite Group notes that declining IT costs across the board and more a powerful system that can deal with once unfathomable amounts of data will continue to be powerful drivers. But a quant system is only as good as the designers who create it. A talent shortage looms. People are hungry for something that delivers above average alpha. Interestingly, that will make the role of technology all the more prominent. Every second, every trade counts.

For more:
- here's the column in Advanced Trading