A Look Into My Cloudy Crystal Ball

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Anthony Malakian, US Editor, WatersTechnology

Anthony looks at some of the topics he expects to cover extensively in 2014.

I've been finding it difficult to write. Normally the words flow rather easily; it's perhaps the prime reason I became a journalist. That, and a love chatting with interesting people over a pint of beer. But of late, I'm typing as though my hands are caked with sludge.

I reckon it has to do with the coming Christmas break. My parents are coming up from Raleigh, North Carolina; my cousins from Pennsylvania and upstate New York. Maybe I'm just excited and can't focus.

For this week's column, I originally wanted to write a coherent year's end wrap-up for 2013. Perhaps provide some analytical thought and opinion to the stories that I've been covering.

Instead, here are some simple tidbits based around what I expect to be major themes of coverage in the New Year.

● I was born and raised in Easton, Pennsylvania. Neighboring towns included Bethlehem and Nazareth. So as a kid, when I heard of this fellow named Jesus of Nazareth who was born in the little town of Bethlehem, I took that to mean that Jesus was born right down the street from me.

How did I get there logically? I took one factual data point (Jesus of Nazareth was born in Bethlehem) and matched that to another factual data point (there were towns near ours named Nazareth and Bethlehem) to make the very incorrect inference that Jesus was born in the next town over.

Now, while Easton is where Crayola Crayons is headquartered, that inference could just mean I'm not the brightest crayon in the box. But this is all to show that while you can have a good deal of seemingly correct information, if you don't have the right processing platform (in the above-mentioned scenario, my brain), it's all for not. You can have all the data in the world, and it won't do you much good if you can't figure out how to properly tie that information together.

I'm starting to loath the term Big Data, but every single CTO and CIO that I speak with keeps on bringing up their data management projects when I ask them about their major areas of spend planned for 2014. Collect the data. Store the data. Report the data. Finally, take that data and figure out new ways to create predictive and analytical outputs based off that data.

Do it correctly, and the investment will more than pay off. Do it incorrectly, then you'll end up like me, explaining to classmates that Jesus was born in a Pennsylvania town mostly famous for its steel production.

● I'm very excited to see how cybersecurity will evolve and the new and interesting ways that hackers will look to target (and I choose that word intentionally) the financial services industry.

This week, it was announced that retailer Target had a breach of its credit and debit card information, amounting to 40 million accounts stolen. It's not yet known if this was an inside job, or if hackers infiltrated Target's systems. But it most definitely sent shivers down the backs of every chief information officer across the country.

I have to believe that there is a major security breach looming for an as-yet-to-be-known capital markets firm. When it happens, the ripple effects will be massive and long.

● More predictably, the most important story in 2014 will likely be around how the buy side interacts with, and adjusts to, new SEF guidelines. As Equinix's Barry Smith recently told me, we're still five or six years from this new market structure reaching maturity. Even still, this next year will be an important staging ground for that next phase in the evolution of swaps' mandated clearing.

● I could say that regulation will be a major theme, but that's a bit too obvious. There are new mortgage rules that could potentially affect hedge funds, so that is a subject I'll be studying. Rules pertaining to AIFMD will also come to bear as a grace period established this year for compliance will run out in July 2014. Dodd-Frank, likewise, is still unfolding.

There are numerous other regulatory hurdles, but by now this is nothing new. Compliance will continue to be a driving force of investment in 2014, '15, '16 and well beyond. The key will be for firms to turn from a strategy where they're "ticking the box" to using compliance-related projects to gain a competitive advantage.

I'm probably missing a whole slew of additional points, which thankfully we have all of next year to examine and debate. But it's Friday, and somewhere there's a pint glass that would like to feel the warm embrace of an editor's hand.

Before I leave, let me remind you that every day over the break ─ save Christmas Day, itself ─ we will be posting "Year End" stories. So over the holidays, if you find yourself with some down time, or you're trying to avoid your family, swing by WatersTechnology.com for some light FinTech reading.

Merry Christmas and Happy New Year.

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