From too Big to Fail, to too Large to Survive

https://tabbforum.com/opinions/from-too-big-to-fail-to-too-large-to-survive/

Larry Tabb TABB Group – “The trading business is being captured by electronic market makers/liquidity providers, and the short-term risk transfer business is being poached by shorter-term quantitative and specialized hedge funds.” … “If the business isn’t shuttered, it becomes almost impossible to rip out the core processing systems, order management platforms, algorithmic infrastructures, reporting lines and business planning processes to achieve the cost structure and agility needed to succeed. Unfortunately, for most firms, that is what is needed.

The Problem with Algo Wheels

https://tabbforum.com/opinions/the-problem-with-algo-wheels/

Michael Mollemans – TABB Group “The problem with algo wheels, however, is that they tend not to account for the risk factors underlying the fat-tail distribution of algo returns, and algo wheel selection processes often turn into a game of guessing the finer points in the algo wheel’s logic. The better the guess, the better the fit to the algo wheel, the better the ranking.

All in all, algo wheels need to go beyond gross median cost calculations to include standard deviation risk factors, as well as netting out market and sector betas, or the end result likely will be broker algo rankings that just oscillate between best to worst and then from worst to best along a mean reverting system over time.”

Click here for other articles on the wheel.

Refinitiv Appoints News Industry Veteran as Head of News Performance

http://svdaily.com/refinitiv-appoints-news-industry-veteran-as-head-of-news-performance/

BUSINESS WIRE – “New role created in response to increased demand for trusted news in turbulent geopolitical environment.” … “Refinitiv has appointed Richard Mably as Head of News Performance to enhance the value of Refinitiv’s extensive news coverage to help power and advance the financial community.” … ” Refinitiv has invested heavily to expand news coverage on the Refinitiv Data Platform in response to demands from customers for market moving insight across the globe. Refinitiv now carries news from over 10,000 sources up from 7,000 thousand sources two years ago.”

Three Predictions for the Future of the Desktop

https://tabbforum.com/opinions/three-predictions-for-the-future-of-the-desktop/

James Wooster Glue42 – “A major trend we are witnessing right now is what is labelled as “Digital Transition” – that is to say, the common-sense alternative to a multi-year application rewrite. The key steps are:

  1. Host the applications in a desktop workspace alongside the other (non-legacy) applications.
  2. Deploy user-behavior analytics to identify the areas of the legacy applications that are most used and/or would benefit from a rewrite.
  3. Provide external access to these areas via simple interop data-sharing techniques and expose as discoverable micro-applications .

These micro-applications can then be used as is or selectively replaced with new and/or more functional replacements. Critically, all of this can be done while preserving the user experience before, during and after change.”

Related video: – https://tabbforum.com/videos/the-financial-desktop-of-the-future-james-wooster-glue42/

Due Diligence 2.O: How Vendor Risk Assessment Will Evolve

https://www.finextra.com/blogposting/18200/due-diligence-2o-how-vendor-risk-assessment-will-evolve

Alex Golbin IHS Markit – “Due diligence transformed … Redesigning due diligence with control objectives makes the process more logical and the outcomes more applicable to assessing and managing third-party risk. … Notably, the process is more efficient for financial institutions and vendors alike, time to market is faster for firms making risk-based decisions, and firms can have much more confidence that their assessment and monitoring procedures produce actionable insight. … All of these combine to improve the overall risk posture of the industry. … It will be a journey, but the faster we start, the better off we will be.”

How Machine Learning Pushes Us to Define Fairness

https://hbr.org/2019/11/how-machine-learning-pushes-us-to-define-fairness?utm_source=twitter&utm_medium=social&utm_campaign=hbr

  • David Weinberger – As we look at higher levels of abstraction — from using sliders to adjust the mixes in the bins, to questions about optimizing possibly inconsistent values — ML is teaching us that fairness is not simple but complex, and that it is not an absolute but a matter of trade-offs. 
  • Financial Research: The Final Frontier for Fintech Innovation

    https://tabbforum.com/opinions/financial-research-the-final-frontier-for-fintech-innovation/

    Rowland ParkOf course, Refinitiv (formerly known as Reuters) and Bloomberg terminals have been a mainstay of trading desks for decades, but now firms are using algorithms to transform headlines into data which can be utilized by both human traders and algorithms, to drive trading decisions.The volume and lack of innovation in the world of financial research means that it is very difficult for market participants to effectively handle and consume the information they are receiving, leading to less-effective outcomes.The opportunity now is to use smart technology to transform the liability of information overload in financial research into the asset the analysis was designed to be in the first place.

    Morningstar : Announces Planned Acquisition of Financial Planning Software Provider AdviserLogic

    https://www.marketscreener.com/MORNINGSTAR-INC-10068/news/Morningstar-Announces-Planned-Acquisition-of-Financial-Planning-Software-Provider-AdviserLogic-29508330/?utm_content=20191103&utm_medium=RSS

    PRNewswire – “Morningstar believes in the value of financial advice, and we share a common mission with advisers to empower investor success. We’re excited to expand our ability to support advisers at a critical time for the industry by welcoming AdviserLogic into the Morningstar family,” said Jamie Wickham, managing director of Morningstar Australasia. “Financial planning software is at the heart of the advice process. Combined with Morningstar’s deep data, analytics and research, AdviserLogic’s focus on user experience and advice workflow will enable us to elevate and differentiate our technology solutions for advisers—to support them in running an efficient and compliant practice; and deliver improved outcomes for their clients.”

    CAT Resurrects the Age-Old Question ‘Build vs. Buy?’

    https://tabbforum.com/opinions/cat-resurrects-the-age-old-question-build-vs-buy/

    Alex Rabaev – Overall, in-house built solutions are not replaceable, but it may be more practical to consider outside solutions. The decision is never one dimensional and never in the moment, as it will transcend scope and time. Your decision should balance practical short-term considerations and long-term strategy/vision.