UPDATED 13:43 EDT / AUGUST 28 2012

NEWS

Short of Staff, Financial Traders Turns to Analytic Software and Services

The financial crisis of 2008 and following recession resulted in significant job losses across industries, and the financial services industry itself was no exception. Call it a self-inflicted wound if you must, but the reality is job losses in capital markets has been severe and firms are being forced to do more with fewer workers.

That means relying on both analytic software and outside services to make up for the dearth of junior analysts, researchers and quants that used to populate trading desks. The shortage feels all the more acute in an industry that, thanks to record profits before the crash, became bloated with large staffs of junior-level workers supporting top capital markets traders.

Companies like Opera Solutions are stepping up to fill the void. Opera has developed a portfolio of analytic software designed to reduce the complex, disjointed and manpower-intensive method trading firms previously relied on to price and trade assets, said Jon Di Giambattista, who oversees product management in Opera’s global markets division. One such product is Mobiuss, a suite of applications for researching, evaluating and trading mortgage backed securities and other fixed income assets.

As Di Giambattista explained to me in a recent briefing and product demo, traders previously relied on junior staff to perform much of this work, which included navigating multiple applications, performing numerous data dumps and otherwise doing manual analysis on large volumes of data.

When a bid list came in from someone looking to buy or sell bonds, for example,

traders and junior staff would load the data into spreadsheets for analysis, look up default loan rates with one application, run what-if scenarios in another application and eventually execute trades in yet another siloed system. All told it was an arduous 15+-step process, Di Giambattista said.

Mobiuss greatly simplifies the process, Di Giambattista said, which is critical now that senior traders have fewer if any junior staff to rely n for help. It reduces the number of steps involved by two-thirds or more and requires that trades interact with just one system. The applications allows them to slice-and-dice asset data “six ways from Sunday,” including comparing assets against one another, against historical data and against collateral held by peers.

Importantly, however, Mobiuss lets traders remain in control. Rather than pumping in large volumes of data and spitting out an “answer” – in this case the price of a given asset –”the platform gives you all the controls to come up with your price,” Di Giambattista said. This is critical when it comes to software that supports financial traders, who believe that “they make the market.” Such egos don’t want a machine telling them how to do their jobs or what the price of an asset should be.

Underneath the covers is Opera’s signal hub technology – that is proprietary algorithms and related analysis tools that the company’s Data Scientists have fine-tuned for various vertical industries over a number of years. As I wrote in May:

Opera’s business works like this: Customers send their data to Opera’s data center, where the vendor scrubs, stores and blends it with third-party data sources. From there, Opera’s Data Scientists go to work, combing through the data to identify insights that are then delivered back to the customer in the form of on-demand vertically-focused applications.

Opera’s approach is working. The company did $100 million in revenue in 2011 and is one of the only software vendors successfully delivering Big Data applications to an eager but underserved market. In addition to financial services, Opera also serves the automotive, retail, healthcare and government sectors, among others.

For more on Opera’s approach to Big Data, check out the below video with Shawn Blevins. He’s Opera’s Executive Vice President and General Manager of Global Sales, and he joined my colleagues Dave Vellante and John Furrier live inside theCUBE at SAPPHIRE during our summer tour.

 


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