2010 Year in Review: As Other Factors Commoditize, Analytics’ Value Increases

Whereas traders used to make do with a real-time market data display, a couple of interactive charts and a brokerage report, sophisticated analytics—encompassing terminal displays, embedded analytics in trading systems or websites, and as standalone engines for supporting trading strategies—are becoming a key differentiating factor in the hunt for alpha.

Early in 2010, agency broker and technology provider UNX rolled out an online data bazaar dubbed UNX Marketplace, within its Catalyst execution management system to enable users to sign up for analytics and content from third-party providers, (IMD, Feb. 19), while Barclays Capital also leveraged the web to extend its analytics to a broader base with a web-based equities trading and analytics application, dubbed Portfolio WebBench Live, for clients to monitor real-time execution quality and risk using historical market and derived data, yield curves and quantitative models from the Barclays Capital Live analytics portal (IMD, July 26).

But with increasing volumes of data to analyze at ever-faster speeds, traders need powerful new analytical tools. Thomson Reuters is touting its new Eikon terminal—incorporating its Reuters Insider multimedia platform—as one such solution, which not only provides traditional market data, but video content linked to transcripts that makes it easier for users to identify and navigate to relevant content. Vendors also created targeted content for specific user types, such as Dow Jones, which created a portal for its DJ Investment Banker suite of news, commentary and analytics widgets (IMD, June 21).

At the other end of the scale, the most sophisticated strategies require low-latency, in-process analysis and heavy-duty tick databases for storage and management to support risk management and strategy development, prompting data management and analytics software vendor Xenomorph to move chief executive Brian Sentance to the US and to open offices in Australia and Singapore to support increasing demand for the vendor’s platform worldwide.

Reflecting the same trend towards complex, embedded analytics that can help algorithms make directional decisions or even manage risk in real time, UK-based trading and risk consultancy ClientKnowledge rolled out a range of new algorithms developed using complex event processing technology from Sybase to help banks and hedge funds monitor market risk, as well as systematic liquidity management processes and real-time reporting (IMD, Oct. 18).

The rising value of analytics has not gone unnoticed by larger technology providers such as EMC, which is making a play into the front offices of financial institutions, to exploit demand for solutions that can quickly store, process and retrieve large amounts of data for strategy-building, adapting algorithmic trading strategies in real time, and performing true real-time risk management, leveraging database technology acquired via its purchase of Greenplum in the summer (IMD, Nov. 6).