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June 24, 2008
Real-Time Analysis of Execution Risk Gets High Priority
By Calvin Azuri, TMCnet Contributor
According to Sybase (News - Alert), Inc., the recent Wall Street crisis has highlighted the need for real-time analysis of execution risk in the trading community. Sybase is respected as one of the largest enterprise software and services companies in the world to be focused on managing and mobilizing information. The source of the announcement was a survey conducted at the SIFMA Technology Management Conference 2008. This news comprises just one of a number of critical findings in the survey.
Senior financial executives attending the SIFMA event at the New York Hilton in Manhattan were polled for their opinion. The survey revealed a heightened sensitivity to risk management as a result of the credit crisis and a sense that the crisis is changing the way in which Wall Street firms operate. About 60 percent of respondents identified the ability to analyze execution risk in real-time as mission-critical. Similarly, 62 percent of respondents found a firm’s risk analytics platform to be a key competitive differentiator.
U.S. sell-side equity firms will spend $175 million on the enhancement of software, information management, and infrastructure that support automated trading, routing
, and risk analysis. This information comes from the TABB Group’s report which is entitled “Real-Time Risk: Managing Execution Risk in an Increasingly Electronic World.” The report stipulates that this amount would be 72 percent of total spending on electronic trading in equities.
, and risk analysis. This information comes from the TABB Group’s report which is entitled “Real-Time Risk: Managing Execution Risk in an Increasingly Electronic World.” The report stipulates that this amount would be 72 percent of total spending on electronic trading in equities. “Clearly, trading operations are heeding the call issued as a result of the sub-prime crisis,” commented Eric Johnson, senior vice president and general manager of financial services, Sybase. “Risk management has been thrust to the forefront as a business imperative and competitive advantage in ways it never has before.”
Speed and quality of risk analytics algorithms were noted as ranking among the most important requirements of an effective risk analytics platform. Three out of four respondents cited both attributes as priorities. Third on the list of priorities was the ability to handle high volumes of data, gaining 44 percent of the vote. Wall Street continues to prioritize analytics. The TABB Group is currently projecting that global spending on equity analytics by sell-side firms will reach $459 million in four years.
About 54 percent of the executives believed that it would take “at least a year” for the broader market to show signs of recovery. Lasting signs of recovery are only expected after at least 18 months by about a third of the respondents.
Sybase offers global solutions to help enterprises extend their information securely to individuals at any location, using any kind of device. The most critical data in the world, including commerce, communications, finance, and government, runs on Sybase. Those interested in learning more about the company are invited to attend the TechWave 2008 from August 4–8 at the Mandalay Bay Resort and Casino in Las Vegas.
Calvin Azuri is a contributing editor for TMCnet. To read more of Calvin’s articles, please visit his columnist page.
