Finance

Looks like both Mizuho and Nomura are taking advantage of the Lehman’s fallout and venturing into the e-trading space. I’m guessing this isn’t SDP land?

So I’ve download the Oslo SDK. I’ve read MGrammer in a Nutshell, fired up Intellipad and bashed out my “Quick Trade Entry” grammer. Since I can compile my grammer, I guess all I need to do now is remove the current Quick Trade entry parser from my .NET trading application, load the .mgx image file, extract the XAML, and create an instance of the DynamicParser type that is configured as per the XAML by calling the LoadParserFromMgx method of the MGrammarCompiler.

Why am I doing the above? Most front office trading applications offer some mode of quick trade entry over the standard ticket that requires the traders to select multiple combo box’s, tabs etc. Trader’s usual hate the mouse, and prefer to live by the keyboard (just look at
Bloomberg). Quick trade entry within any trading applications usually involves writing a simple parser that over time become complex over time due to new traders requirements). MGrammer would seem a natural substitute for the home grown parser.

Another area that MGrammer may help in is the logic that lives between components on a trade ticket. These UI components often have to dynamically change based on other selections within the ticket.

TD Ameritrade and Saxo Bank off iPhone applications, Bank of America goes Android

Here

So it looks like Nomura is moving into prime time with its Lehman’s acquisition. Having splashed the cash and bought sensible pieces of Lehman’s, Nomura appear to be venturing down the road of building a new bank (front-office to settlement). At least this should keep the IT staff happy and in jobs for the foreseeable future. The only downside for Nomura is that I suspect they have a number of consultancies who supposedly specialise in “integration” knocking at their door as well to assist.

Anyone know if Nomura is bias to Java or .NET? If its .NET then one can only hope they are looking at WPF/Silverlight for their new banking software. Maybe Microsoft should go knocking at Nomura’s door and offer some Oslo free consultancy and software (as they did to Barcap prior to the release of .NET 2.0). Microsoft could probably do with some financial services press given the last large scale .NET application to gain any interest from the press was probably the LSE.

On another slant, Nomura’s new IT investment might like to have a look at Gigaspaces Cloud Framework - “One Click Cloud”

Front office projects might learn something from this presentation - especially as at some banks 2 weeks is a full project :), and front office software engineers often break every rule in the software development best practices book (partially because the project are run directly by the business)

This is a classic read - it’s just a shame most project managers within investment banks won’t read this :(, and hence will continue to expect 50+ hrs. The madness continues.

Jim Rogers (George Soros’s business partner) and Crisis at Princeton

Goldman and Morgan Stanley have become bank holding companies - the investment bank model is broken! Does this mean we’ll soon see Goldman retail banks appearing on our street corner ready to accept our salary cheques? Mr Mack (the knife) appears to be going that way with “build our bank services“! I guess it won’t be long before I can open a Goldman online bank account, in a similar way to JPMorgan Chase - which should at least generate more revenue for the contracts who got burn in the Lehman’s fall.

I see the BBC is reporting that the FSA is considering clamping down on bonus payments. What other business would tolerated the quality of software that is currently generated by short term bonus driven employees? Where else can you effectively run a production application that deal in millions of dollars per hour/day from a desktop underneath a traders desk, with no backup, and in some cases no source control system, and no idea of where the source code for the binaries exist?

Don’t get me wrong, not all software is of low quality, but it is truely amazing to watch the decision making process unfold within a bank, knowing that the decision wouldn’t have been made if it wasn’t for the deadline of yearly bonus’s.

This posting is worth a read

“The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.

The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.”

I attended an Edward Tufte course yesterday in New York, with a number of colleagues from Lab49. I had read the first 3 of his books, but not Beautiful Evidence, and was looking to see how we can further apply his ideas and principles to our work in building advanced user interfaces for traders, etc.

Overall, it was great to hear from the man himself on how he approaches visualizing data and how one can achieve information density: showing causality, focusing on the information to be presented over the form of production, to integrating different form of production (text, image, graphs), etc. I was enjoyed the specific references to the visualization work (and thus principles), that Gailileo used almost 400 years ago. Specifically, the use of intuitive graphics that portray meaningful data inline with text (just as sparklines can), is a very powerful concept that I think will become a dominant form of communication especially when those graphics are driven off live data.

ET gave his usual amusing powerpoint (PP) bashing routine, most of it very much merited. In general, PP is a bad communication medium, and does encourage slovenly thinking of the material being presented. I liked his comment on how PP is simply a “projector-management” system.

In general, I agree with most of Edwards thinking with respect to the cleanliness and density of content on the visualization - and it is particularly true on printed media. However, I felt that more could be done to update the ideas for the monitor display form ( see his commentary on the iPhone here).  We all use pretty high-res monitors, and traders tend to have the very best, if not HD. Monitors are becoming increasing pervasive and a lot more thinking can and should be done in optimizing information density and clarity on trading applications. Once full touch screens are available, new opportunities for interactivity will present themselves and thus drive the engraining of the medium. 

So, with that said, I feel that many of the principles of visualization data in general, as well as some of his ideas for maximizing content (over admin junk such as scroll bars, buttons, navigation, etc.) are well founded. The advice that no more than 10% of the screen should be for non-content is also a very good sanity check.

BUT, in capital markets there are a number of scenarios where the visualization of high-frequency and complex data do  not have elegant solutions (other than some of the ideas at Lab49 ) . Yeah, sparklines are nice and have tremendous information density for showing a lot of linear ticking data and showing absolute and relative trends. I wonder how E.T. would approach some of the situations we have to deal with like: a) full market depth view of fragmented markets in real-time, b) multi-dimensional pricing and risk (e.g. diversified portfolios that need to be viewed across asset, geography, industry, company dimensions, for example), c) credit risk of a portfolio of structured products ?

UK and US authorities finally act. Will this save Morgan Stanley and Goldman’s? - we’ll find out tomorrow when the markets re-open.

The idea of a Morgan Stanley-Citigroup tie-up was possibly a little off base, given the history between Vikram and Mack.

Cool visualization in the New York Times, illustrating the changes in market capitalization of the major Wall St firms from a year ago to Sep 12, 2008. Hover over the companies to look at the astonishing negative changes (e.g . Citigroup down 58% in one year from $236.6bn to $97.8bn!)

Morgan Stanley and Barclays to merge? Goldman and Wachovia? Or maybe Morgan Stanley and Goldman? It’s hard to see anyone merge with Goldman, primarily due to its culture.

Tullett Prebon appears to have failed to merge with GFI. I worked for Tullett & Tokyo many years ago. Video of trading floor here.

Another day, another drop in stock price for Lehman’s - sub $5. Will Bank of America buy them? Whoever suggested Goldman’s as a buyer was obviously not thinking straight - Goldman’s is way to much an elite society to consider buying anyone else. Goldman’s is the type of investment bank who would rather build their own database than buy it.

Internally I hear rumours that the CEO has gone AWAL, with what appears to be no staff moral speeches, and staff having no clear idea or direction.

Finally thought: How depressed can the 25 Bank Street staff be to enter their office lobby, only to see the giant TV screen highlighting Lehman fall on a daily basis? I heard from a colleague that the BBC commented last night that 25 Bank Street was also for sale?

So the grand plan Lehman’s announced today involves selling its prize asset - 55 per cent stake in its asset management unit. It also put itself up for sale today. I remember working for Lehman’s back in the mid 90’s, when its stock price was < $15, today it’s pretty much back to the same value. While working at Lehman’s during the 90’s I remember the rumours that it might be bought by JPMorgan or another investment banks. Given that JPMorgan bought Bear Stearns this year, there is now little chance of that happening.

Final thoughts: Given Lehman’s grand office in London (25 Bank Street), with its collection of security guards outside the building (the only bank I know that has this in London), I wonder if the security guards are now used to keep the employees in? Maybe we’ll see the security guards with “For Sale” boards as of tomorrow?

Interest Rate spread trading can lead to some interesting strategies. Thanks to a colleague for the following links: TED spread, The Pros and Cons
of Butterfly Barbells, Profiting from Mean-Reverting Yield Curve Trading Strategies

Interesting reading for those who work in the city. I’ve noticed a number of trading floors that are looking slightly empty compared to a year to two ago. Lefts hope the banks have learnt from previous failure lay-offs.