The Hindu Business Line : Transforming data into insight, profitable decisions

As principles-based enforcement takes hold, senior management in capital market firms will have to develop the capability to demonstrate accountability over the outcomes and build auditable workflows, advises a new book authored by Sybase experts ( www.sybase.com). This will mean improving cooperation across business, technology, operations, risk management and CFO functions, write Raj Nathan, Irfan Khan and Sinan Baskan in The New Data Imperative: Managing real-time risk in capital markets ( www.eastonsp.com).

They cite the observation of the Senior Supervisors Group of the Bank for International Settlements which, in its investigation into the sub-prime meltdown, indicated that coordinating risks and aligning required data and technology across the enterprise will be major challenges for some financial firms. The authors foresee, therefore, that a heightened level of regulatory scrutiny and cooperation across international boundaries will create even greater urgency for better information management and decision support.

For instance, “if proposed new regulatory processes are implemented, firms may have to show an auditable trail of transactions every 10 minutes requiring an online repository of trades and risk measures. This will demand a large amount of storage, computing power and skilled manpower.”

The book captures the top IT concerns and strategies of some of the seasoned players in the industry. Such as of Ajit Naidu, CTO for Merrill’s Global Investment Banking and Institutional Technology division, who sees a need to have not only an extremely fast, reliable, scalable and redundant market access layer but also solutions for handling large volumes of market data.

“We are evaluating InfiniBand (a switched fabric interconnect standard for servers) along with grid computing to address the need for fast access to storage and the demand for computation cycles. We are evaluating not only large-scale database technologies but also how to query, filter, and run algorithms on streaming data,” says Naidu.

And there is this view of Frank Piasecki, president and co-founder at ACTIV Financial — that calculating risk statistics has become an extremely difficult task for financial institutions, “particularly for automated trading desks which need to scan the market for more than 1.5 million option records for volatility opportunities.”

A critical piece in the design criteria for the next generation IT infrastructure, the authors observe, will be the capacity to harvest related information from both internal and external systems and to streamline, aggregate and present the information to decision makers in a contextual framework.

“Information floods into automated, high-frequency trading systems throughout the 24-hour news cycle. Utilising software programs that read, interpret, and react to news items, a trade that is prompted in response to a US Treasury announcement, for example, could be completed in milliseconds.”

Not a dream, but a reality, as in the case of the Reuters NewsScope Archive, a computer-readable archive of its global news service, which has created ‘new and interesting patterns in the incredibly complex field of event-triggered trading.’ The service tags digital IDs to news events as they break in the markets, so that they can be downloaded for software to analyse them for relevance and deliver them for action, the authors describe. “Traders linked into the comprehensive global news archive are thus equipped with information that is timed and stamped to the millisecond to help them identify events that affect their securities and better manage event risk.”

We are all heading to microseconds, alerts a quote of Andrew Brenner, head of the ISE Stock Exchange, a subsidiary of the International Securities Exchange. “To be even a player in this game, you have to be in the single-digit milliseconds and you have to go down from there.”

The authors conclude by stating that mastering the data capture and flow and continuously transforming data into information, insight and profitable decisions will be the new competitive advantage, in which IT will be a critical contributor to success.

Too risky to ignore.

See yourself as part of a conversation

Public resistance to the growing use of surveillance is marginal due to the overriding motivation for a safe society and a growing desire for an easy life, says Karen Lawrence Öqvist in Virtual Shadows: Your privacy in the information society ( www.vivagroupindia.com).

She sees, on the contrary, a growing acceptance of the use of surveillance and tracking technologies, as in the case of linking of all national databases holding residents’ personal information into one or more repositories, considering the advantages such as improved government services and effective crime deterrence. “The message is clear: the ‘information age’ has unleashed a surveillance society that feeds on our imaginary fear fuelled by media hype.”

We are on the cusp of a new surveillance era, declares the author. She notes that today’s children will not think of questioning its logic because they have grown up accustomed to the notion of being tracked as the norm. “In fact the current generation could be the last generation to question the rational.”

From one perspective, one may fret about living in an information society “whereby you have joined the ranks of information junkies with an inability to ‘turn-off’: the ‘always on’ syndrome, a malady of an age that risks making your short time in this world meaningless, reduced to the level of being a slave to SMS messages, the telephone, blogging, and email.”

A different, and perhaps a healthier, perspective is to see yourself as part of an information society that has given you a voice, cheers Öqvist. The voices of many individuals are giving power to the people in a way never experienced before, she adds.

“Online you are equal, you are not judged by what colour you are, which religion you follow, by how much you weigh or on your ability to communicate.

This is equality in the beautiful sense of the word.”

Rather than feel like particles of dust floating around, or a grain of sand on the beach, you can see yourself as part of the same conversation, the conversation that has become an extension of our physical lives, the author describes.

“The conversation enables you to feel part of a community, a community that matters to you, where you have a voice and where you can be sure that someone out there is listening and interested in hearing what you have to say.”

In this new era, Öqvist finds the media has to be participatory, with lines between audience and creator blurring; for, participatory media are ‘conversations’ among the people formerly known as the audience, and the conversations are open-ended and democratic.

“Newspapers that are successful are those that are becoming part of the conversation and those are the newspapers that have websites with content that is free or mostly free allowing bloggers to link in the articles to their sites.”

On how bloggers have shaken up the mainstream media, there is an interesting quote of Glenn Reynolds comparing journalism to making beer. “Without formal training and using cheap equipment, almost anyone can do it. The quality may be variable, but the best home-brews are tastier than the stuff you see advertised during the Super Bowl.”

Öqvist mentions Yahoo! as a case of how users not only contribute content but also take part in its filtering and placement. For example, soon after the terrorist attacks on the London Underground in 2005, quite a few people took photos of the resulting chaos with their mobile phones and wirelessly uploaded the same to Flickr, and others tagged these photos by attaching labels such as ‘London Underground’ or ‘bombings’ so that the photos could be easily found; visitors rated the pictures.

Öqvist narrates how this in turn brought the best pictures to the attention of Yahoo!’s human editors, who displayed them alongside professional content across Yahoo!’s news sites, all in minutes. “These new collaborative processes have been named ‘folksonomies’ to distinguish them from the traditional top-down ‘taxonomies’ that human editors create.”

Recommended read to cure oneself of the online phobia.

dmurali@thehindu.co.in