Via Mostly I found a paper from IBM called “The trader is dead, long live the trader!”. What a great paper, I can’t believe I missed it to this point. I have for some years been working at auto-trading with a few clients/ partners. More specifically – I had been working on optimization software to train, test, verify and moreover tune auto-trading systems. This paper, and the other elaborate drama referenced in the Mostly post talk about the future of the financial markets. Of course – all predictions must be taken as that – but for years we have been talking about the ideas discussed in the IBM paper.

In essence – the crux of the matter is that once transparency and speed take over – all classes of investors are on an even playing field. The ability to make decisions based on real time analysis as opposed to knowledge gained is crucial. This means that all the more automated systems and decision making processes are key. Pre-trade analyitcs are key. Risk management is of course paramount. Read the IBM paper. Especially in the financial services IT area – it is important to see what the future growth and shrinkage areas are going to be (most likely).

I love this diagram (excerpted from the IBM paper)

So – all you technologists in the finance space – here is what you need to work on. Not only does the paper say that there will be increased spend on ‘vendor utility’ in the finance space, it refers to these as key items that ‘the players’ will be looking for. There are no real shockers here – but this is an excellent set of recommendations to follow. I will say that I agree with much of this speculation.

I was having a chat with a friend of a friend from a large investment bank the other day. He said to me “it is a war between the investment banks. Technology is now, and will be increasingly moreso, the differentator”. Wow – is that the calling of opportunity or what!

A great time to be doing technology in finance – at the cusp of a reniassance.

-Chris

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