The Cost of Credit

Ah, credit. Everyone needs it, nobody gets enough of it, and people always want to take it. Retail banks pump enormous amounts of resources into their credit augury engines, determining whether it's a safe bet to lend thousands upon thousands of dollars to aspirant homeowners and credit-card applicants on a daily basis, all of which require incredible technology to be able to function. And ultimately, all fall prey to one single issue, which is that no matter how prosaic a person's life may be on paper, humans are unpredictable.

In financial markets, credit products are vast behemoths, requiring titanic computing power to assess, evaluate, measure and manage risk. Hearing about the server farms and computing grids that calculate portfolio exposure makes me think, instantly, of Eighties guilty pleasure Tron, with traders as the lightcycle jockeys, darting in and out of lines set by risk. Or, on a more sinister level, the field of human batteries from The Matrix, with assets and instruments cherry picked by mechanical, AI-powered claws according to pre-set criteria.

My colleague Tim Murray has filed a fascinating report from four end-user perspectives this month on the risk function, discussing (among other things) how it has changed from a compliance function to something infinitely more important, and how the potential growth of algorithmic trading in instruments such as credit-default swaps is alarming. It's a great read, and I encourage you all to take a few minutes to digest it.

Social Networks
Outside of Tim's piece, there's plenty for our sell-side readers in this month's magazine. I cover the problems with derivatives reporting in Europe and the US, while our London-based reporter, Marina Daras, reports on how trading platforms are becoming more social.

I touched on the idea that buy-side and sell-side firms were incorporating elements of technologies that were inspired by social media for information management last month, but Marina has run with this on the hyper-social side of the platform space, speaking with UBS and Saxo Bank about their platforms, along with others.

We also have the vast majority of the content from the Sell-Side Technology Awards, including detailed write-ups of each category, along with Q&As, video interviews and more.

With so many features and award reports, it's also easy to lose track of the general coverage we've had this week, such as the ECJ's dismissal of the UK's financial transaction tax challenge, an update from Aequitas on its 2015 launch plans, and continuing coverage from our recent conference in Tokyo.