Fintech Capital Magazine #4

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E ARE DELIGHTED TO HAVE SHOWCASED OVER
a hundred of the leading, most disruptive
and exciting brands in UK FinTech in these
pages over the last twelve months, all of
whom have shared their knowledge and
insight in some exceptional articles. It has
been a privilege to have helped give an audience to these
inspiring thought leaders and we look forward to hearing
more from them and many others in the New Year.
Our vision on starting The FinTech Capital Magazine was to
share with the community exactly why the UK was leading the
global FinTech race. We wanted to create a platform to share
with our community some of the outstanding thinking from
companies and individuals in the growing FinTech scene.
Over the last twelve months we are thrilled to have seen so
many of the companies that we have featured stretch on to
even bigger and better things. LMAX, for example won the
prestigious Techtrack 100, Algomi capped an exceptional
year winning the “Most Innovative Trading Product/Service”
at the Financial News Awards in Trading and Technology,
and Fidessa won the “Best Sell-Side Trading System of
the Year” at the FOW Awards for Asia. There are too many
other winners to name in a single paragraph! Indeed it has
seemed that almost all those featured have thrived in 2014
with reports of growth both in profit and headcount, and
numerous business wins both home and abroad.
Aswelookaheadto2015,thereseemstobeaneverincreasing
appetite for UK FinTech and we predict an even stronger
Toby Babb
Managing Director,
Harrington Starr
W
Welcome to the
FOURTH EDITION OF
FINTECH CAPITALand the final issue of 2014
the

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surge in businesses situated in the space. The Tier 1 banks are circling and
there have been mandates for senior executives to investigate how they can
follow in the footsteps of Barclays excellent Techstars programme.
One of the big questions that remains is “are Financial Services companies
ready for the FinTech revolution?” Indeed one could also ask whether some of
the FinTech start-ups are being too innovative and really thinking about how
to pitch and gain traction for their product or services. 2014 has seen many
companies with outstanding products with clear cost reducing or efficiency
gains yet to take off because they are failing to gain the necessary credibility
from the banks themselves. Are they really answering a necessary problem?
Have they got a clear and efficient pitch? On the other side, are banks still
being too conservative? Will that cost them dear as the age of cloud, payments,
P2P, crowd funding, social and mobile threatens to eat their dinner?
2015 will need to see an “entente cordiale” between the disruptors and the
banks for the whole FinTech movement in the UK to really reach another
level. As mentioned in FTC3, the UK has been set up with a genuine trading
advantage for FinTech with strong
government support, geographical
advantage and access to talent,
so innovative and entrepreneurial
thinking is required. For both parties
to fully capitalise on the opportunity,
the banks, under ever increasing
pressure not to be innovative with
mounting pressure around regulation
and cost reduction, need to set up
opportunities to invest and trust
either the products themselves that
can make a difference or back the
companies who are looking to chance
the face of finance with investment.
Encouraging moves are starting to
happen in this space with C level staff
being mandated across the industry
to investigate.
The results could and should see a genuine boom for both the SME
and start-ups in the space but again, the brilliant technologists who are
pushing the boundaries will need to be more commercial in their thinking.
Often we see great ideas scuppered owing to a technology mind-set failing
to translate appropriately to a business one. Technologists have a natural
tendency to over complicate and clarity is essential in pitching. Those
who are able to marry clear business benefit alongside deep technical
credibility (the aforementioned Algomi is a prime example of how well this
can work) will undoubtedly be the ones that thrive. The make-up of the
founding team therefore becomes so important. This is THE key factor that
investors, angels and VCs look at when making their choices on who to back
and potential buyers will be thinking precisely the same way. Great product
or not, the commercial strength of the team itself will be the best predictor
for future success.
OURVISIONONSTARTING
THE FINTECH
CAPITAL MAGAZINE
WASTOSHAREWITHTHECOMMUNITY
EXACTLYWHYTHEUK
WASLEADINGTHEGLOBAL
FINTECHRACE

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The UK is ready for a FinTech revolution. If the banks continue to recognise
the opportunity by becoming slightly less conservative in their thinking and
the providers tweak their go to market strategy, we could be about to witness
something truly game changing.
With this in mind, we are delighted to be involved in the launch of a new
communityinFebruary2015.WehaveteamedupwithLondonLovesBusiness.
com, The Realization Group, Adaptive Consulting, The Test People and Cake
Solutions to launch “The FinTech Influencers.” This will be an exclusive, free,
invitation only group who will meet quarterly to debate the key areas to drive
and support FinTech change. More details will follow but the goal will be to
drive UK Innovation and Growth by connecting the most influential players
in start-ups, disruptors, providers and end users, and creating a manifesto
for positive change in the industry. Keep an eye on @FTInfluencers on Twitter
for further details in the coming weeks.
With this level of change afoot, the incredible infrastructure of communities,
incubators and accelerators will play a bigger and bigger part. There is
government backed Innovate Finance feature in the pages that follow, we
have featured both Eddie George’s LondonNewFinance Group and the
exceptional work that Erik Van der Kleij and the team are doing with L39
in Canary Wharf in our sister publication “The Trading Technologist”, not to
mention the aforementioned Techstars, Tech City et al. These movements are
helping connect, educate and promote the brightest and best in the industry
and that creates an exceptional grounding for success.
An exciting time for UK FinTech. Thanks to all of those who have contributed
this year and we are delighted to have seen this publication grow so well
throughout the year. We hope that you enjoy the read.
Toby
Toby Babb
Managing Director,
Harrington Starr

6
StephaneDubois–Xignite
JanSkoyles–TheRealAssetCo
ChrisSkinner–TheFinancialServicesClub
ClaireCockerton–InnovateFinance
PeterJohn–PharosGlobal
ChrisLees–FixSpec
NikWhitfield–Panaseer
ManuGupta–Lakestar
EricMouilleron–Bankable
RichardGoold–WraggeLawrenceGraham&Co
PatrickMyles–CaplinSystems
NadiaEdwards–Dashti–HarringtonStarr
C O N T E N T S
0 1 0
0 1 4
0 1 6
0 1 8
0 2 0
0 2 2
0 2 6
0 2 8
0 3 0
0 3 4
0 3 6
0 3 8
INVESTORS, START-UPS,
COMMUNITIES & NEW FINTECH009

7
C O N T E N T S( )
0 4 4
0 4 6
0 4 9
0 5 2
0 5 6
0 6 0
0 6 2
0 6 4
0 6 6
0 6 8
0 7 1
0 7 4
TRADING
TECHNOLOGY
ETRM/CTRM
SanjayShah–Nanospeed
IanGreen–eCo
AntonioCiarleglio–HarringtonStarr
MartinCheesbrough–Digiterre
TomKemp–HarringtonStarr
EdwardStock–ArtaoisLtd
AndrewdeBray–FactumLtd
RichardKidd–Planlogic
AndrewThomas–HarringtonStarr
LudwigClement–CTRMForce
DrGaryM.Vasey&PatrickReames
-CommodityTechnologyAdvisory
JulianEyre–OpenLink
043
059

8
C O N T E N T S( )
0 7 8
0 8 2
0 8 4
0 8 6
0 8 8
0 9 0
0 9 2
0 9 5
0 9 8
1 0 0
1 0 2
BIG
DATA
OUTSOURCING
VS INSOURCING
EricFishhaut–DataGenic
PeterRobertshaw–Independent
VanDiamandakis–Corvil
GaryCollier&DennisPilsworth–ManInvestments
RichardChunn–GlobalReachPartners
RalphBaxter–ClusterSeven
ManujSarpal–ETFSecurities(UK)Ltd
MickBrant–Teknometry
CosmoWisniewski–CitisoftPlc
AlexOdwell–HarringtonStarr
MalikKhan–XOpenHub
077
094

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INVESTORS,START-UPS,
COMMUNITIES&
NEWFINTECH
StephaneDubois–Xignite
JanSkoyles–TheRealAssetCo
ChrisSkinner–TheFinancialServicesClub
ClaireCockerton–InnovateFinance
PeterJohn–PharosGlobal
ChrisLees–FixSpec
NikWhitfield–Panaseer
ManuGupta–Lakestar
EricMouilleron–Bankable
RichardGoold–WraggeLawrenceGraham&Co
PatrickMyles–CaplinSystems
NadiaEdwards–Dashti–HarringtonStarr

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HE SCENE OCCURS AT A SAN FRANCISCO HIPSTER BAR IN LATE
2014. She asks “And what do you do during the day?” He
calmly says while tucking his plaid shirt in and rubbing his
fully-grown beard “I work in a fintech startup”. “Me too“,
she replies giggling. “Are you in payments or digital wealth
management?”
The story draws a smile. Of course two years ago, few millennials in San
Francisco knew what Fintech (e.g. financial technology) was. And now they all
see it as their ticket to fame and fortune-via-IPO. Move over social networks
and micro-blogging, the next innovation frontier lies at the crossroad of Wall
Street and Silicon Valley*.
Just in the month of October 2014, Fintech companies in the US have raised
more than $1B, including the $75M IPO of valley-veteran Yodlee, the $64M
raised by digital wealth management FinTech poster-child Wealthfront or the
$150M raised by payment darling Square. The capital flows and the hefty
valuations don’t lie: Fintech is on fire. And that fire is not only burning in the
US as fintech ecosystems are flaring up in Singapore, London, Frankfurt and
Paris and many other technology centers in the world.
It was not always like this. If you tried to raise money in fintech during the
years that followed the fall of Lehman Brothers, most Venture Capital and
Private Equity firms would have gently pushed you out the curb with a polite
“We are not investing in fintech right now”. Now money is gushing out of their
funds faster than their fledgling startups can spend it and they are briskly
updating their web sites to make you believe they were in fintech all along.
So what has changed since the doom-days of finance?
The first change is economical: The markets are back in the saddle. As a proof,
the Dow Industrial has broken its all-time record high 79 times in 2013 and
2014 alone and it closed on October 13, 2014 at its highest value in history.
As a rising tide lifts all boats, the bubbling markets have boosted financial
services and yanked financial technology in their trail. One thing that stands
out in the growth of the markets is the meteoric growth of Exchange Traded
Funds (ETFs)—which has exceeded every other asset class since their
inception 20 years ago. Assets in ETFs now exceed three trillion dollars. Their
inherent ease of use (as they provide the passive investment convenience
STEPHANE
DUBOIS
Xignite
W H A T ’ S F U E L L I N G T H E
FINTECH FIRE?
T

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STEPHANE
DUBOIS
Xignite
of mutual funds with the ease of trading previously only found in equities)
could certainly explain some of the rebirth in the markets. In any case finance
is hot again. God bless America.
The second change is technological: It’s been almost 20 years since the
Internet revolution began on August 9th, 1995 (the day of the Netscape IPO
if you wonder) and technology has matured tremendously in many areas.
Those concurrent evolutions have combined to create a cradle of innovation
which is fueling the Fintech Fire:
■ The scaling of the public cloud (aka Amazon Web Services)
which not only lets startups rev up on a dime but also confers
them a significant long term cost structure advantage.
■ The maturing of app development via open source, re-usability
and tools which has reduced costs and timelines to hours or
days. Imagine holding a weekend-long hackathon in 1992, it just
would not have worked.
■ The coming of age of social networking and search engine
optimization (SEO) that have automated go to market strategies
and slashed customer acquisition costs. With social contacts,
adoption can go viral. Virality was not conceivable 10 years ago.
It is not even a valid word in my spell-checker.
■ The dawn of APIs (whether used for trading via FIX or for
market data consumption as with my company Xignite) which
enables true end-to-end automation of processes that used to
be complex and human-intensive. 15 years ago—without easy
trading, market data, and account funding APIs—digital wealth
management companies like Wealthfront, Personal Capital or
Betterment could not have existed.
These waves are hitting financial service institutions like a high speed
train. Most of them have had their heads buried in the sand focused on
regulation and cost savings since the days of that infamous Lehman Brothers
bankruptcy. Wall Street is now petrified that Silicon Valley is about to eat
its lunch and it is scrambling to catch up. But once you see that most large
banks still twitch when one whispers the word cloud, you realize that the
technology and cost advantage of the fintech revolutionaries is significant
indeed. God bless APIs.
The third change is social. It has to do with a generational replacement
of a population that has grown up with the internet, surrounded by
mobile devices, and used to instant gratification and levels of ease-of-
use never experienced by humanity before. That generation could not
care less about traditional investment and advice models. They would
not think twice about banking with Google, Starbucks or Facebook if it
were available. They are not worried about security on the Internet and
the last thing they want is to have to talk with someone to get anything
done. They are ready to use Siri to place a trade and expect an investment
account to open and fund instantly.
••
“THE MARKETS
ARE BACK IN THE SADDLE.
AS A PROOF, THE DOW
INDUSTRIAL HAS BROKEN
ITS ALL-TIME RECORD
HIGH 79 TIMES IN 2013
AND 2014 ALONE AND
IT CLOSED ON OCTOBER
13, 2014 AT ITS HIGHEST
VALUE IN HISTORY.”
••

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According to a survey conducted by e*Trade, what the majority (72%) of
millennials want is a financial advisor like R2-D2— “a copilot with diverse
skills who helps you when you need it and offer a variety of tools you can
use yourself”. Only 28% of them are looking for a friend like C-3PO, i.e. “a
constant companion focused on your money who will always tell you what to
do”. If you are betting that Millennials will reverse their habits to that of their
parents once they hit 40, you may lose.
One may look at the mortgage crisis and think that because of it, financial
services will never be the same. But the impact of the financial mortgage
crisis is negligible compared to that millennials will have on the industry as
they grow up. God bless our children.
So what is fueling the Fintech Fire is three deep-seated technological, social
and economical transformations that are catalyzing to create an innovation
bonanza that is turning the industry upside down. Of the three, only the first
one is cyclical. And even if a bear market could put a cold shower on the
whole phenomenon, the lasting characteristics of the two other trends allow
us to safely predict that financial services and financial technology will never
be the same.
* Technically a bit north of that since Wall Street is now lined-up with condos
and neglected for hip neighborhoods uptown by New York startups and since
Silicon Valley has been displaced by San Francisco as the startup capital of
the world.
STEPHANE
DUBOIS
Xignite

The Pharos
Lighthouse
changed the
lives of ancient
explorers, guiding
them to safety.
In 2015, Pharos
Global Solutions
will help to guide
the development of
Sharia investment.
TO FIND OUT MORE:
www.pharosglobal.co

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T PRESENT THERE IS A DISPARITY BETWEEN THE EFFICIENCIES
offered to us by the internet and the technology used by the
banking system.
Whilst the majority of us organise, socialise and transact
online, it is clear that banks are yet to catch up with this
trend. Yes, they offer internet banking but they are failing to spot a growing
trend in the way we are starting to use the internet - to disintermediate
systems and processes.
Step-up the blockchain. Blockchain is arguably the most exciting thing to
happen in finance. In fact not only finance but any kind of environment where
there is a requirement for information to be stored, shared, protected and
traded.
For a quick explanation for those of you who are unfamiliar with the term
blockchain, it is a protocol for the storage and exchange of value. It acts as a
decentralised database that records and verifies all transactions.
As we have seen, disintermediation is reaching into all areas of life; Airbnb
removes the need for booking agents, 99design.co.uk removes the need
for branding agencies, Oscar is breaking the health insurance market. The
blockchain tops them all, it removes the need for third-parties when it comes
to trust, verification and transactions.
There are many challenges the blockchain offers traditional banking
technology, but one that particularly stands out for me is the opportunity it
offers the unbanked.
THE UNBANKED
At the moment traditional banking technology cannot be described as
inclusive. Standard Chartered Bank group chief executive Peter Sands
recently stated that blockchain technology was a “true computational
innovation that could be very powerful in the context of financial inclusion.”
Banking, in its current form, requires too much infrastructure and box-ticking
in order to make it efficient and affordable for those in remote and developing
countries to use it. But they have little choice and this monopoly costs them.
JAN SKOYLES
The Real Asset Co
BLOCKCHAIN
O P P O R T U N I T I E S
A

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The remittance market is currently worth around $436bn, thanks to the 20% -
30% it costs to send and receive money from abroad.
Sending currency via the blockchain - whether bitcoin or sovereign currencies
(were banks to allow it) is as easy as sending an email. This can be done at
virtually zero-cost, within minutes and in a transparent manner. So, with this
in mind, the banking system is looking at lost revenues of $436bn.
The blockchain also offers a much higher level of security. All transactions
are traceable and significantly reduce the risk of fraud and corruption (no,
this is not about anonymity). In terms of an individual’s credit-worthiness,
the blockchain acts as a substitute.
The efforts to open a bank account in terms of ID, location and infrastructure
seem enormous when compared to the ease of transacting using the
blockchain. Why would an individual looking to grow a business in, say,
Uganda, make the effort to go through traditional banking technology?
Yes, we have all seen in the media coverage of Silk Road and Mt Gox, bitcoin
and blockchain are open to abuse, however this is an opportunity for the
banks. As an already (fairly) trusted entity they can leverage the blockchain
by partaking in the innovation surrounding it. By doing this they won’t miss
out on the most exciting development since the internet.
JAN SKOYLES
The Real Asset Co
••
“BANKING, IN ITS CURRENT FORM, REQUIRES TOO MUCH
INFRASTRUCTURE AND BOX-TICKING IN ORDER TO MAKE IT
EFFICIENT AND AFFORDABLE FOR THOSE IN REMOTE AND
DEVELOPING COUNTRIES TO USE IT. BUT THEY HAVE LITTLE
CHOICE AND THIS MONOPOLY COSTS THEM.”
••

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N RECENT TIMES, MARKETS HAVE CHANGED FROM FINANCE and
technology to finance with technology or, as it is better
known, Fintech. Fintech merges two industries into one
and the city that is developing this faster than any other
is London.
London has many incubators, such as Barclays Bank’s Escalator in East
London. There are also regular meetings and conferences to support start-
up fintech firms here, such as Finovate, a two day fashion parade of the hot
new firms that takes place here next February. It implies that this is a market
ripe for disruption, but what are the numbers? Is there a real change here, or
just an emerging trend of trial (and error).
Well, the first numbers that may startle are that over $10 billion has been
invested in fintech start-ups since 2009, according to Silicon Valley Bank.
This amount has been spread across over 2,000 start-ups. This makes it one
of the top 10 investment areas for funds globally.
This analysis is echoed by Accenture, who note that 2013 saw private Fin
Tech companies raise nearly $3 billion – more than tripling the $930 million
invested globally in Fin Tech in 2008.
So there’s a big deal here with finance, money and banking seen as the hot
space for change through technology.
THAT IS CLEAR.
What is even more interesting is that the place where all this development is
taking place is … LONDON.
Accenture’s analysis of European Fintech data reveals that since 2004, the
lion’s share of Europe’s FinTech deals and financing have taken place in
UK and primarily London. In 2013, UK and Ireland represented more than
half (53%) of Europe’s FinTech deals and more than two-thirds of Europe’s
Fintech funding (69%).
Having said that, it’s not just London.
It’s also Silicon Valley.
CHRIS SKINNER
The Financial
Services Club
H O W
LONDONis winning the
FINTECH WARS
I

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In 2013, nearly one of every three FinTech dollars and one of every five deals
went to Silicon Valley-based companies. Europe, meanwhile, accounted for
13% of all Fin Tech funding globally in 2013 and 15% of deals. However as
the chart below highlights, London’s five-year growth trajectory in FinTech
investments has outpaced Silicon Valley.
With such frenetic activity, banks are waking up to the opportunity to disrupt
themselves. Many of the largest banks are creating corporate venture capital
firms. BBVA, Sberbank, American Express, Citibank, Visa and others have
all been very active in the startup space this year. HSBC’s fund runs at $200
million and Santander’s fintech fund has $100 million in capital.
Meanwhile, London has one other key feature that makes it the hottest
space for fintech globally and will see Wall Street fall behind over the years.
This X-factor is that London has its technology hub and financial centre
side-by-side. The City, Silicon Roundabout and Canary Wharf are all within
spitting distance of each other. New York doesn’t have that advantage as
the technology centre is six hours away on the West Coast in Silicon Valley.
As America has divided its resources between East and West Coast, does
that hamper innovation? Does that constrain their fintech capabilities?
Some would say absolutely yes. For example, when we look at where all the
fintech dollars are going into start-ups, a third is going into Silicon Valley but
$1 in every $6 is going into London, and it is doubling year on year.
London has just launched Innovate Finance, a nurturing centre for developing
fintech businesses, along with Level 39, the hotspace for fintech innovation
and we are seeing a true integration of finance and technology.
Do we see that in New York? No, as all their innovation is over 2,500 miles
away in San Francisco.
This is a real cause for celebration in London. As banks become technology
companies, having the banks and the financial technology innovators all
sitting together is truly going to make London the financial centre of the
world for the future.
Mr. Skinner is chairman of the Financial Services Club, CEO of Balatro
Ltd. and comments on the financial markets through his blog the Finanser.
He can be reached at chris.skinner@fsclub.co.uk.
CHRIS SKINNER
The Financial
Services Club

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OMEN HAVE ALWAYS BEEN UNDERREPRESENTED IN THE BANKING
and technology sectors. These industries in Britain have
given us the luxuries of the modern world, yet they are still
old-fashioned with their maledominated hierarchy. From
startups to global banks and large technology firms, it is
time for every player in this industry to address the serious
gender gap problem, take collective action and act now to shape a world
with greater gender equality.
Diversity campaigns are beginning to make an impact and companies are
starting to take notice of the importance of women in the workforce. Lloyds
Banking Group, for example, recently announced its plans to ensure 40 per
cent of the businesses 5,000 senior staff are female within the next six years.
Barclays and Credit Suisse have also begun to offer diversity initiatives as
well. Women are considering careers in the sector. According to a recent
Randstad financial survey, for the first time in history there are more women
applying for financial services jobs than men.
The technology sector –with its so-called forward-thinking vision of the future-
is stuck in a time warp when it comes to female representation in the workforce.
In fact, the industry is grappling with an even bigger gender gap than the
banking sector. Google has revealed in its first diversity report that only 30% of
its employees are women –surprising for a progressive company. At least it is far
better than the average 17% that you find in most tech firms. Another study by
the Centre for Economics and Business Research shows how a paucity of skilled
staff in the IT sector is causing a 15% drop in output, which could be resolved by
balancing the gender gap that permeates the overall industry.
How can we address this issue so that we can get the talent we need to
sustain these industries, but also to accelerate the growth of the fintech
sector– which combines both banking and technology and is playing a
crucial role in the future prosperity of our economy?
According to the latest figures, the alternative finance sector is now valued
at over £1billion, a 90% rise from 2012. Behind this growth is the fintech
innovation that is helping to create new services and products that are
disrupting traditional ways of banking.
CLAIRE
COCKERTON
Innovate Finance
C L O S I N G T H E
GENDER GAP
IN FINTECH
W

1 9
Being the world’s biggest financial services epicentre, London has taken a lead
to support fintech, creating accelerator spaces that bring top talent together with
established technology companies and banks to foster the innovation to make
finance work for everyone. There’s a lot of money being in invested in the sector
as well. Over $1 billion US dollars have been invested into 34,000 tech firms in
London this year- and a $200 million sovereign fund from Singapore’s Infocomm
Investments has recently been extended to European fintech firms too.
What would make this ecosystem better and more exciting is if we had more
women involved in the future of fintech.
A global movement in addressing the gender gap across the technology
industry has been gathering momentum in recent years - with government,
corporations and start-ups all keen to change the ratio. Studies repeatedly
show that companies with founding female members increase long-term
returns, by up to 30% on average. Given the clear commercial benefits, why
has this not translated into a change in numbers?
The pressing problem to highlight is not just the lack of women in senior
positions at tech firms, but it is also that female spearheaded technology
success stories are lesser known. The fundamental lack of female
Zuckerberg equivalent figures in the media is deterring young girls from
entering into the tech industry in the first instance.
However, this is all set to change. New female faces are cropping up in
London’s booming fintech scene. Last month, chancellor George Osborne
launched Innovate Finance at Canary Wharf’s Level 39, a UK trade body
association that will support the next generation fintech start-ups that are
disrupting traditional forms of finance. If we are to encourage young girls to
seriously consider a career in technology, we need to champion the likes of
Clare Flynn Levy, former hedge fund manager and current CEO of Essentia
Analytics, a platform that leverages behavioural economics to help fund
managers examine historical trades and to improve portfolio performance.
We need to cast a spotlight on women like Julia Groves, CEO of Trillion
Fund, a hugely successful crowdfinancing platform for renewable energy
projects. And Jan Skoyles, the CEO of the Real Asset Co, an online platform
that offers access to the bullion markets. By increasing the transparency
and prominence of women in technology, only then can we create a long
and lasting social and cultural shift in acceptance of women in technology.
Furthermore, more initiatives are necessary to increase the take up of technical,
engineering and computer science studies amongst females. A number of
coding clubs focusing on women has sprung up in the past few years with
this precise mission. In particular, Alice Bentinck, founder of Code First
Girls, provides free coding classes, career talks and hackathons at university
campuses across the UK to foster the next generation of female developers.
There is also Jess Erickson, founder of Geekettes in Berlin, a community which
nurtures support between women in technology, development and leadership.
Finally, and perhaps crucially, we need to give women the flexibility they need
to balance their careers with other priorities in life. Remote working, part-time
hours,moreequalityathome,candosomuchtosupportwomenintheircareers.
CLAIRE
COCKERTON
Innovate Finance

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aving worked for the last 20 years for organisations at the
forefront of financial technology, when starting Pharos
one of my main assumptions was that easy to use, cutting
edge technology was enough create a great Fin Tech start-
up company.
This is only partially true.
So what makes a great Fin Tech start-up? Technology? Yes, to a certain
extent. But start-ups also need a real business opportunity – the elusive
‘gap’ - and be able to exploit the gap long term to create a profitable,
sustainable business.
No matter how ground breaking your technology, if you haven’t recognised
and researched your opportunity and clearly defined the gap you’re going to
fill, you can build great technology but not create a great start-up company.
In the current business environment, if you build solutions aimed at
crowded legacy markets, with incumbent systems embedded, you’ll come
up against serious hurdles. Financial institutions have invested huge
sums in their legacy environment. They work - nowhere near as good as
your elegant new solution but it takes money and time to unpick current
systems to allow yours in and this can be a tough sell!
Sure you can do it, you are selling your vision after all but you are making
things difficult for yourself and slowing your potential growth.
So find your gap in the market and remember, there must be a compelling
reason to use your technology. Research where it can be positioned with
the least resistance in your target market and how you can present a
business case that cannot be ignored. Essentially, translate all the great
features of your technology into something that has a real, tangible benefit
to your target market’s business.
Secondly, partner with your customers. Work together to build intuitive
technology that tangibly simplifies your users’ daily tasks. Give users the
information they need to make better decisions quickly and more accurately.
We started Pharos with two development partners and work closely to solve
their business problems. Their knowledge of workflow, analytics and of
PETER JOHN
Pharos Global
W H A T M A K E S A G R E A T
FINTECH START-UP?
H

2 1
PETER JOHN
Pharos Global
business critical reporting requirements is vital to the success of Pharos
and provides business feedback on all technology ideas we have.
Finally, assemble the strongest team available and ensure you get the
tech to business talent mix right. A start-up is essentially a collection of
individuals that share the same goals and ambition. The CEO provides the
leadership and culture but your team members must share the vision and
apply it daily. You must back your team to
work independently to deliver shared goals
and it is vital you spend as much time with
the Head of Sales as with the CTO.
And one last thing - don’t forget to make it
easy for customers to do business with you.
Make sure they can adopt your technology
quickly with minimal disruption; have
transparent pricing that fits the opportunity;
be flexible; and most importantly, offer
not just great technology but business
transformation that helps your customer’s
business to grow.
••
“ESSENTIALLY, TRANSLATE
ALL THE GREAT FEATURES
OF YOUR TECHNOLOGY INTO
SOMETHING THAT HAS A REAL,
TANGIBLE BENEFIT TO YOUR
TARGET MARKET’S BUSINESS.”
••

2 2
>
lmost three years ago I made the decision to start my own
company. After 15 years in electronic trading, I felt the
frustration I know many share: of being a cog in a slow-
moving machine that struggles to innovate. I wanted to
make a difference and to relearn what it means to be in
business - listening to customers, solving their problems,
and building a lasting company.
Today FixSpec is a thriving, profitable start-up selling into top tier exchanges,
banks and software vendors. It has been an incredible journey and by far the
most rewarding (and exhausting) period of my life.
Along the way I’ve learnt a huge amount about start-ups - what makes them
tick, what makes them different, and how to build a company from the
ground up.
#1 REVOLUTION NOT EVOLUTION
Financial services is full of skewed market shares, with their dominant
firms and long tails. Consider trading venues – each asset class has a small
handful of markets which dominate and then a sharp drop to smaller, niche
players. The pattern repeats for software vendors, market data vendors, asset
managers, brokers and so on.
There are two implications for FinTech start-ups: (1) you will likely launch as
underdog to a bigger, better funded competitor against whom you will always
be judged, and (2) you must choose to target either big or small customers.
So what do you do?
My recommendation is to avoid the common trap of building copy-cat
products and attempting to displace the incumbent based on price or
functionality. Unfortunately you are likely to be out-gunned by marketing, or
fail due to sheer inertia within your prospects.
Instead focus on radically changing the value proposition for the buyer; offer
a product that can’t be meaningfully compared to the existing players. Sound
hard? It is. But done right, you can consistently win against incumbents, even
when pitching to the largest prospects. I recommend the book Blue Ocean
Strategy for more on this topic.
CHRIS LEES
FixSpec
5LESSONS FOR
START-UP SUCCESS
A

2 3
>
CHRIS LEES
FixSpec
#2 FOLLOW YOUR VISION
I’ve noticed that firms with successful products often forget their original
vision, focusing instead on running the business day-to-day. The outcome
works until the market turns, they start to lose market share and they
dispatch senior management to a fancy hotel to dream up a confusing,
one-line “mission statement” that should magically turn things around
(until it doesn’t).
A vision is different from a mission
statement; it describes the future state of
your company and markets, as opposed
to why your company exists today. A good
vision is simple, speaks to a known pain
point, and your prospects agree with it
without needing any sales pitch.
It’s vital that start-ups have a clear vision
to guide them through the early years
of continual testing, refinement and
re-positioning. For example, FixSpec’s
founding vision is that our industry currently
documents, develops and maintains APIs in
a very inefficient and error-prone way which
must be replaced. We are iteratively building
tools which surround better documentation,
unlocking the efficiency gains that flow
directly from that vision.
Your product should deliver your vision rather than be your vision. While
your products may change and evolve over time, a good vision doesn’t waver.
#3 REJECT THE CORPORATE NORM
All too often first-time founders replicate the structures, positioning and
even the products of their former employers. Yet entrepreneurs on their
second or third start-up rarely copy like this.
One of the most rewarding aspects of starting-up is the opportunity to shape
a company you want to work for; the culture, the processes and the values.
The simple fact is that big-company structures simply don’t work in start-ups,
so it is time to break the mould.
■ Do you really need an office, marketing or sales from Day 1?
■ What’s the ROI on that expensive conference stand?
■ Unless you are serious about creating content,
do you really need a blog or Twitter?
■ Do you really need external funding?
The answers will obviously depend on your business; my advice is simply to
question what you are used to. In particular, challenge the received wisdom
that says you need external funding and a fancy office in the City to win
clients – remember that some big companies started as self-funded ventures
in spare bedrooms, garages and dorm rooms.
••
“ONE OF THE MOST REWARDING
ASPECTS OF STARTING-UP IS
THE OPPORTUNITY TO SHAPE A
COMPANY YOU WANT TO WORK FOR;
THE CULTURE, THE PROCESSES
AND THE VALUES. ”
••

2 4
CHRIS LEES
FixSpec
#4 SCALE LATER
It’s interesting to listen to managers in large firms talk about scale. Typically
they imagine going from zero to thousands of clients at warp speed, and
then speculate on how many off-shored resources one might need to do that.
The reality for start-ups is very different.
One ingredient for start-up success is rapid iteration, development and
testing of ideas (read The Lean Startup for more). The goal is to shape and
tune your product until it really resonates with your target audience at a
profitable price point. Only when you reach that position should you scale
and promote. Remember the adage “nail it then scale it”.
Established firms don’t follow this approach and often waste time and money
as a result. Just think about how many big projects or product launches you
have seen fail in your career. Bigger companies can afford to absorb such
waste, but start-ups can not, so correct timing of promotion and scale is vital.
#5 INVEST IN INTERNAL TOOLS
Building lean, automated internal processes is vital to keeping headcount
low while delivering the rapid change and exceptional customer service that
will be the hallmark of the new FinTech generation.
There are a wide range of affordable, online productivity and collaboration
tools that can eliminate the barriers to superhero productivity. I recommend
embracing these tools early and automate quickly.
At FixSpec we use tools like JIRA, Zendesk, Tresorit and Hackpad to achieve
massive productivity gains, and to share a common understanding of
priorities, customer issues and company direction despite being spread
over three timezones. We’ve also built our own tools to automate tasks from
accounting to QA to SLA tracking; investments which will pay real dividends
in our next phase of growth.
I have a lot of other tips to share, so if you are serious about starting up then
please get in touch and let me know how I can help. Good luck!

2 6
>
ANKS ARE DOING BATTLE AGAINST CYBER CRIMINALS, NATION
states and hacktivists in a digital realm which is constantly
in flux. These highly agile adversaries are adept at dancing
butterfly-like around our defensive measures before
administering a highly targeted sting. They operate in the
digital ether where the infrastructure and opportunities
are continually evolving and anonymity is a given. It’s like playing chess on
a board where the size, shape, pieces and rules are constantly morphing,
where your adversary gets ten moves to your one, and where if you win you
get nothing, but the man across the table stands to become richer than
Gates. Most distressingly, you may never know who beat you. In many ways,
this is not a fair fight.
It is generally accepted by cyber security professionals that cyber risk to
financial services organisations is increasing. Fortunately most people aren’t
cyber security professionals, but for the layman the news headlines offer a
glimpse of the skirmishes occurring in this ever evolving digital battle. There
are more threat actors with more capability, more specialisation, committing
more targeted attacks in more agile ways. In parallel, there is no doubt that
the digital economy offers massive potential upside to financial services firms
which are increasingly exploring new markets, devising new digital products,
opening new channels and therefore increasing their exposure to would-be
attackers. What is for certain is that a failure to take the opportunity offered
by the digital economy will alienate customers and further open the door to
the FinTech start-up brigade, leading to a downward spiral of market share.
One advantage we can bring to bear in this battle is our ability to spend
our budgets on effective security measures. Cyber security investment is
creeping up the ladder as an operational cost of doing business. In response
to the threat - and increasing budgets - technology companies have been
developing a myriad of detection and protection tools – whizz-bang gadgets,
some of which deliver value, some whose claims exaggerate capability. So
how does a bank decide which to buy? How do you know whether it is more
effective to implement a tool or to run a cyber security awareness programme?
Where is the hard data to support decision making for operational planning
and risk assessment?
The reality is that cyber risk is hard to measure as due to the many
NIK WHITFIELD
Panaseer
CYBER CHESSHow can we enable the business to take
advantage of the digital economy, whilst
protecting its customers and assets from
the darker elements that lurk there?
B

2 7
NIK WHITFIELD
Panaseer
factors involved it is constantly in flux. Unlike most risk calculations, in
cyber security we have extremely agile adversaries who are actively trying
to execute a business case against us. They will invest commensurate effort
and expense in order to realise their return on investment. For these reasons,
the Board and security leaders do not have the management information
to interpret overall cyber risk exposure, how it is changing and the impact
security investment decisions have on it. Previous arguments have
concluded that measuring cyber risk is too challenging: the answer will never
be ‘right’, the data volumes are too large and disparate, the business context
is too complex, and it’s impossible to put a dollar amount on the potential
downside of a successful attack.
I disagree for two reasons. Firstly, Big Data technologies now exist which
allow us to get our arms around ALL of the raw data needed to make
informed quantitative assessments of risk. Secondly, just because it is not
possible to get a perfect answer certainly does not mean that there is no
value in the exercise. We have spent years modelling market and credit risk,
but the answers can never be completely accurate. The key to value is to
incrementally improve metrics in order to achieve a meaningful ROI – i.e.
maximise the effectiveness that your cyber security budget whilst enabling
the business to take advantage of the digital opportunity. If we can do this, if
we can create fact based cyber risk metrics, we can realise numerous business
case in one fell swoop. We can enable new business operations by offering
a better understanding of the forecast change in cyber risk profile. We can
identify when security budget is insufficient to keep risk within an acceptable
appetite. We can benchmark against peers to find areas for improvement.
We can run due diligence on suppliers and target acquisitions in days, not
months. These use cases and benefits have been enabled by the emergence
of Big Data technologies and I expect to see cyber security as an emerging
‘must have’ use case for these platforms.
Let’s finish with an example which you will likely have seen in the press.
Following an attack which leaked seventy six million consumer records and
seven million small business records, Jamie Dimon stated that JP Morgan
spends approximately $250M per year on cyber security, and that he expects
to double that in the next five years. The first question I find myself asking is
“Was that enough money?”. The second question immediately follows, “How
do we answer the first question?”. Without understanding the effectiveness
of the budget through quantitative cyber risk metrics, we will never be able
to answer that question.
Panaseer is developing new technologies, models and processes to devise
timely, quantitative cyber risk metrics in order to answer the important
questions raised here.

2 8
VER SINCE THE RECENT FINANCIAL CRISIS OF 2007-2010,
there is a renewed interest in technology businesses that
attempt to change the way finance operates, both from a
consumer and business aspect. There are many exciting
and fast growth segments of Fintech that have attracted the
attention of entrepreneurs and investors alike.

For example, the ability to assess risk has become a critical center point. With
new data sources such as social media like Linkedin, mobile location services,
etc, there are more markers available by which to evaluate creditworthiness
for consumers. As a consequence, peer to peer platforms and online
credit agencies can assess risks with theoretically lower default rates than
traditional banks. New lending platforms are being started constantly that
make lending to businesses easier and direct, all because of a better and
more tech oriented methodology for risk assessment. Applications span
across credit card refinancing, home loans, business working capital, invoice
financing, and on and on. End clients are often able to save considerable
money in financing rates, but more importantly shave off days or weeks in
paperwork or process.

The analytics space within Fintech has also gained significant momentum.
Early startups such as Algomi have amplified the amount of data banks that
investors have access to, and consequently allow relationships to be far, far
more effective. As a result, the financial service industry is racing to adopt
the technology, and gain greater insights.

Building trust will remain the greatest challenge for new Fintech platforms.
While many startups are able to build a loyal early adopter base, catering
to the mass will require tremendous PR and marketing efforts to build trust
and loyalty.

Traditional banks will see greater pressure to compete for clients, and often
will face rapid margin pressure from cheaper online alternatives. It isn’t
inconceivable to imagine a world in 10 to 15 years where the traditional
banks transition more into advisors or agents, guiding individuals and
businesses to the most optimal platform suited for them – instead of
managing everything in-house. However in the near term, the brand and
trust created by large institutions remains strong and will remain pervasive.
MANU GUPTA
Lakestar
THE TOP TRENDS
IN FINTECH
E

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3 0
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E NEED BANKING, NOT BANKS’
In 1994, Bill Gates predicted the end of traditional banks.
Twenty years later, a new wave of companies intends
to disrupt financial services and reinvent the banking
experience. Baptised ‘FinTech’ for ‘Financial Technology’,
these companies operate in the fields of payments,
lending, money transfer, data and analytics, and digital currencies. They
long for innovative, transparent and inexpensive financial services that
banks have failed to offer to their customers.
Frustrated with paying high bank fees for international money transfers,
Taavet Hinrikus and Kristo Käärmann have reinvented how money is
sent abroad. TransferWise, their peer-to-peer service, is spearheading
a revolution against banks and promises a ‘clever new way to beat bank
fees’. It has become notoriously well known for its belligerent advertising
campaigns including a highly successful campaign exposing high bank fees
by spreading the words F¥€K, $CAMM€D and DA¥£IGHT ROBB€R¥ across
bus stops, tube stations and billboards across London.
Internet has changed the way consumers interact with money – making it
possible not only to transfer money, but also grant loans or raise funds in
one click. While banks have struggled to shift from traditional branches
to online services, FinTech companies are born mobile and are ideally
positioned to target the new generation of ‘digital natives’.
Fidor Bank in Germany is an online and mobile ‘Community Bank’ that
offers ‘banking with friends’. ‘Fidor Bankers’ sign-up through Facebook
Connect and share saving tips on Twitter. The bank even offers an interest
rate based on the number of Likes on their Facebook page. Fidor Bank’s
purely online and social media strategy has led to a 20% decrease in their
cost of customer acquisition compared to High Street banks.
In a recent interview with Bloomberg, Marc Andreessen – co-founder of
the $4 billion venture capital firm Andreessen Horowitz – proclaimed that
FinTech ‘can reinvent the entire thing’. He predicts that ‘nonbank entities
[will] spring up to do the things that banks can’t do’. Will FinTech bypass
traditional banks in the future?
ERIC MOUILLERON
Bankable
BANKS ARE DEAD.
LONG LIVE
THE BANKS!
‘W

3 1
>
ERIC MOUILLERON
Bankable
BANKS IN CONTROL OF BANKING
Despite the banking industry being shaken up by the arrival of non-bank
players, it is still dominated by the same few big names that Bill Gates
dismissed as ‘dinosaurs’ twenty years ago. The main reason is that the
highly regulated banking industry creates high barriers to entry. Therefore,
the industry has resisted disruption by new technologies better than other
sectors such as books and music.
Banks definitely have had a head start due to years of investment in security,
compliance and regulation – necessary divisions to which FinTech start-
ups struggle to devote significant funds. Besides, banks have deployed
huge capital intensive distribution networks through branches making their
brands omnipresent.
Despite several attempts by anti-bank movements such as Occupy Wall
Street to create mechanisms for people to bypass the traditional financial
system, the reality is that banks remain in control of banking. Due to anti-
money laundering rules and other regulatory concerns, large banks refrain
from opening bank accounts for FinTech companies in areas deemed risky
such as digital currencies and remittance. If banks holding the accounts
of TransferWise locally decided to close them, they could shut down the
revolution within a day.
Therefore, rather than building a new financial system, FinTech will ride on the
rails of the existing one. Not only will they use banks’ reliable infrastructure,
but FinTech will also inherently benefit from their investment in security and
compliance. By adding a layer of innovation to the existing system, FinTech
will save time and capital as well as gain the confidence of their partners and
clients.
BANKS FOR CORE BANKING
FINTECH AT THE EDGE OF BANKING
Traditional banks and FinTech will play complementary roles in building the
“Bank of the Future”. Banks will remain in place to provide the backbone on
which non-bank players could rely on to offer value-added services.
FinTech will compete at the edge of banking to accompany and empower their
customers in their every-day lives. Specialised players will provide tailor-
••
“WHILE BANKS HAVE STRUGGLED TO SHIFT FROM TRADITIONAL
BRANCHES TO ONLINE SERVICES, FINTECH COMPANIES ARE
BORN MOBILE AND ARE IDEALLY POSITIONED TO TARGET
THE NEW GENERATION OF ‘DIGITAL NATIVES’.”
••

3 2
>
made offers for targeted markets and geographies. FinTech is addressing the
underserved and revenue generating niche segments such as money transfer,
personal financial management or mobile payments, all propelled by the
Internet, which has proven to be a lot more cost-effective than branches in
reaching the “last mile” customers.
For example, in the United States, Simple does not intend to become a bank
itself, but to develop a better interface around how modern banking should
work. Hence, the online banking service built a layer on top of The Bancorp
bank’s infrastructure. Using a similar model, PayTop offers a multi-currency
prepaid card in France targeted at frequent travellers and students under
Raphaels Bank’s license.
Serving niche markets, FinTech companies know their potential clients and
are able to monetize Big Data and analytics. For example, by inventing new
risk-scoring models, OnDeck has reshaped how loans are granted to SMEs.
It evaluates creditworthiness based on business performance analytics –
compiling cash flow, credit history, public records, and consumer experiences
– rather than just credit history files.
To conclude, the banking sector has been affected by the digital revolution
over the past twenty years. Although the ‘dinosaur’ banks have undoubtedly
evolved, they have not gained the agility of reptiles (yet). To cope with
upcoming changes in the financial industry – which, according to the
chairman of Lloyds Banking Group, will be more significant ‘in the next 10
years than there has been in the past 200’, - banks will have to innovate or
live with razor thin margins.
Banks are considering various strategies to keep up with the pace of
digital revolution. Firstly, the creation of dedicated internal structures
will help spread an innovation culture within and across departments.
Traditional banks could also leverage external innovation from start-ups
by engaging through incubators and accelerators. Lastly, partnering with
FinTech companies will help them to provide value-added services. FinTech
companies are ‘enablers’ for banks to acquire digital innovations by adapting
new white-label technologies and banks need to start finding some new
friends amongst them.
ERIC MOUILLERON
Bankable

3 3
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3 4
>
E REGULARLY BEMOAN THE FACT THAT THERE’S NOT ENOUGH
venture capital available to support entrepreneurs through
the early stages of their companies’ growth cycles. Is that
changing? Is finTech changing it?!
European VCs are thinner on the ground than their US
counterparts but with the rise of new finTech specific accelerators (think
Level 39 and TechStars) and the hype generally around the global finTech
phenomenon, we are seeing a huge increase in the number of VCs that are
focusing on this sector. New finTech funds are being created by the banks and
investment managers (such as Orange Growth Capital) but it is particularly
interesting to see the more generalist Tech VCs also piling in. When big VC
brands such as Sequoia, Accel, Andreessen Horowitz and Battery Ventures
start to consistently back a tech sector then the world takes note.
Analysis carried out by CB Insights on the investment patterns of 12 of the
biggest global VC funds showed more than 300% growth in new monies
invested in finTech in 2013 compared back to 2009 levels. And, on our
doorstep in Europe, we are seeing even greater levels of growth in finTech
investment that the traditional US tech are receiving. The US market remains
much larger though and we still have some way to go to begin to consistently
match the huge rounds that are achieved in the US (think, for example:
Square’s $100m round and Stripe’s $80M round). However, whilst we all
applauded the Funding Circle $65m series D round led by Index Ventures,
this is a sign of things to come for Europe in general but London specifically.
Investors are most actively looking at four segments: lending; personal
finance; payments; and bitcoin/blockchain technologies. What is becoming
increasingly apparent though is that there are a very large number of “me too”
companies seeking investment. These companies are looking at nuanced
variations on themes that either exist already or that are being explored by
significant numbers of other start-ups.
I was reminded recently by Phil Black of True Ventures of the phrase ‘blue
ocean investing’, which involves investing in the development of new
products or business models in uncontested or new markets. There is a
lot of existing activity to disrupt and new demand can be created in a blue
ocean. Compare and contrast this to ‘red ocean investing’: investment
RICHARD GOOLD
Wragge Lawrence
Graham & Co
FINTECHONOMICSIS INVESTMENT BACK
IN FASHION?
W

3 5
RICHARD GOOLD
Wragge Lawrence
Graham & Co
into existing industries where significant competition already exists – not a
strong place to invest…
FinTech represents a fantastic opportunity for VCs to invest in blue ocean
business models – many industries are ripe for disruption (insurance
certainly comes to mind) and there are some technologies where we
have only just begun to understand how they will be deployed on a mass
scale (think bitcoin). Investors often struggle with pure technology risk
though (certainly on this side of the Pond) – security, development, IP,
reputation and competing technologies can mean that there’s only one
technological winner.
One thing is for sure though: 2015 is definitely going to be the year of finTech.
••
“THE US MARKET REMAINS MUCH L ARGER
THOUGH AND WE STILL HAVE SOME WAY TO GO
TO BEGIN TO CONSISTENTLY MATCH THE HUGE
ROUNDS THAT ARE ACHIEVED IN THE US.”
••

3 6
>
EGIONAL BANKS THAT FIND THEMSELVES IN THE ‘WAIT AND
see’ position over mobile trading in 2014 may find the
competition has overtaken them if they aren’t careful.
Most tier-one banks already give their clients mobile
access to real-time pricing and market data, as part of
offerings. Some have gone further, allowing their clients
to manage orders and execute trades via mobile, but now more and more
clients are demanding mobile as an additional channel for trading.
Research presented in a new Caplin whitepaper, Trading On The Move,
shows that a wide range of users including hedge funds, corporates and
wealth management firms are hungry for more trading options. They want
mobile apps that provide a real-time view of their trading positions and,
increasingly, trade execution, order management and post-trade services.
It seems they are not as concerned about security and compliance as the
sell side assumed, and in fact are just like the rest of us, whole heartedly
ready to embrace mobile, if only the sell side would provide it.
The more agile banks have already recognised this as an opportunity to
get a head of the pack and capture customer loyalty. Pioneers such as JP
Morgan and Citi have demonstrated both the global demand for mobile
trading and the feasibility of providing it. Their mobile offerings allow their
clients to manage orders and execute trades via mobile, and Goldman
Sachs has announced that it will shortly do the same. These banks that
have aggressively rolled out mobile execution offerings worldwide have
seen rapid adoption with few regulatory issues.
But while other tier one banks still ponder, regional banks are fast catching
up, with some already offering mobile trading and many more planning
it. Until recently, most regional banks were still at the stage of evaluating
demand and debating technology, security and compliance issues. But
a growing number are now making mobile trading a key part of their
e-distribution strategy, viewing it as essential to protect and grow their
franchise. In most jurisdictions there are few regulatory constraints on
using such services, provided that all transactions are recorded, and those
that have gone before have already proved, mobile trading is highly secure
if properly implemented.
PATRICK MYLES
Caplin Systems R
Delaying
IMPLEMENTATION
ANOPTIONFORcapital markets mobile trading
is no longer

3 7
PATRICK MYLES
Caplin Systems
From a technology standpoint, the barriers to entry are also tumbling
down as it is no longer necessary to build, maintain and support multiple
mobile apps, since HTML5 has evolved to the point at which it can be
used to create a high-quality near universal solution. With firms such as
Caplin being able to offer mobile trading solutions as standard products
that can be configured and customised, this has greatly reduced the cost
of and timescales involved in bringing a mobile trading channel to market.
It would appear mobile trading in the capital markets is not about if, but when.
••
“WITH FIRMS SUCH AS CAPLIN BEING
ABLE TO OFFER MOBILE TRADING
SOLUTIONS AS STANDARD PRODUCTS THAT
CAN BE CONFIGURED AND CUSTOMISED,
THIS HAS GREATLY REDUCED THE COST OF
AND TIMESCALES INVOLVED IN BRINGING
A MOBILE TRADING CHANNEL TO MARKET.”
••

3 8
>
ECENTLY THE FINANCIAL SERVICE COMMUNITY HAS BEEN
faced by numerous regulatory changes that have posed a
plethora of challenges to their technology teams to meet
the new demands. Where the changes have largely been
to improve transparency and reduce risk, many felt that
the regulations would negatively impact the true nature of
technology and its inherent need to constantly innovate.
What has emerged in the past year has been a huge amount of growth in
the financial services start-up community, similar growth in the regulatory
software vendor space, in data and in telecommunications. Across the
technology space there has been vast amounts of innovation in response to
regulatory changes. So what may have seemed at
first like a problem, the industry has responded
by making it into an opportunity for innovation,
growth and prosperity.
One can’t deny that the challenges have been
huge and the impact of the regulation did mean
that investment into technology had to change its
direction to immediately impact the demands of
the impending laws. What we have seen emerge
in some firms is that when facing the regulatory
changes head on they have allowed steps forward
in their technology teams to build more adaptable
and transparent platforms for trade.
Looking at the question of whether regulation
and innovation can coexist we have seen that
with the onset of the new regulations, technology
teams had to be innovative to ensure they were
compliant in their hugely vast and complex
technology platforms. Where some people
foresaw the demise of prop trading, on the other
hand we have seen a massive growth in demand
for in house technology teams to build electronic
trading systems from scratch in reaction to the
broadened use of this type of trading.
NADIA EDWARDS-
DASHTI
Harrington Starr
R
••
“IN THE ENTIRE HISTORY OF
TECHNOLOGY THERE HAVE
ALWAYS BEEN PROBLEMS
THAT HAVE PROPELLED THE
MARKET FORWARD.”
••
REGULATION
innovation
c o e x i s t i n t h e
FINTECH COMMUNITY?
Can
and

3 9
NADIA EDWARDS-
DASHTI
Harrington Starr
Again where every technology platform in finance had to be checked with
a fine tooth comb to see if it was compliant, the technology challenge and
therefore innovative response grew. With all the new laws and more set to
come, the challenge has increased for technologists working on these trading
platforms.
New regulatory legislation is presenting more and more significant
challenges to the financial services technology community and in turn many
senior heads within the industry have decided to innovate entirely outside
of their usual norms and start up their own firms in response to some of the
challenges regulations have posed to the market. We have only to look at the
peer to peer lending firms, the mobile technology forms and the compliance
organisations that are cropping up across the industry.
We only need to see how TeraExchange have recently performed their first
regulated bitcoin swap highlighting how innovation and regulation have
coexisted – in this instance the regulators did all they could to ensure a
clean, transparent and fair market for everyone.
In the entire history of technology there have always been problems that
have propelled the market forward from the code breakers of WW2 to Linus
sat in his bedroom playing Prince of Persia in the 80s; the industry thrives on
a challenge and the recent regulatory impact has allowed for some positive
steps forward, and many more to come.

FINOVATEEUROPE.COM
“For online personal finance nerds
- like your humble correspondent -
Finovate is the Super Bowl
and World’s Fair rolled into one.”
- Mary Pilon, Wall Street Journal The Wallet
LONDON • FEB 10 & 11, 2015

The selected companies will showcase their latest ideas to an influential audience that’s
shaping up to be Finovate’s largest ever outside the US (well above last year’s sellout crowd
of 1,000+). It should be a packed house at the Old Billingsgate Market Hall, and we hope
you’ll join us to watch the future of finance unfold live on stage (and don’t forget, because of
Harrington Starr’s partnership with Finovate, we’ve got a special discount for you – see below).
WITHOUT FURTHER ADO, HERE ARE THE COMPANIES
WHO WILL BE DEMOING AT FINOVATEEUROPE 2015:
SEVERAL ADDITIONAL PRESENTING COMPANIES WILL BE ANNOUNCED CLOSER TO THE EVENT.
Each company will receive just 7 minutes on stage to do live demos of their latest technology
(no slides allowed!). The demos will be followed by four hours of networking time each day, giving
you a chance to connect with the most interesting minds in European fintech.
If you’d like to join us at the event, you can register here. And don’t forget to use our special
partner discount code HarringtonStarr20 on the registration page to save 20% on your purchase
(on top of the Early-Bird discount). Hope to see you there!
FinovateEurope 2015
Demo Companies
Announced!
On February 10 and 11, 70+ handpicked companies will
take the stage at FinovateEurope in London to demo their
latest financial and banking technology innovations.
ADVICEGAMES
AIRE
AKAMAI
ALPHAPOINT
AVOKA
BACKBASE
BARZAHLEN
BENDIGO AND
ADELAIDE BANK
BIZEQUITY
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ERIPPLE
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4 3
TRADING
TECHNOLOGY
SanjayShah–Nanospeed
IanGreen–eCo
AntonioCiarleglio–HarringtonStarr
MartinCheesbrough–Digiterre
TomKemp–HarringtonStarr

4 4
>
NCREASING NUMBER OF CAPITAL MARKET REGULATIONS ARE
kicking in that financial trading institutions have to comply
with or risk paying heavy penalties to the regulators.
Regulators, such as the European Securities and
Markets Authority (ESMA), the Securities and Exchange
Commission (SEC) and the Commodity Futures Trading Commission (CFTC)
in the USA have brought out regulations that have an impact on trading
firms.
CFTC’s Concept Release on Risk Controls and System Safeguards for
Automated Trading, SEC’s 15C3-5 regulation and ESMA’s guidelines on
automated trading are forcing trading institutions to have a better look at
their pre-trade risk management
in particular. However, they are
costly to implement in software,
adding hundreds of microseconds
to every single trade, and reducing
competitiveness as a result.
So what’s the answer? Do your risk
management on an FPGA! Because
of the inherent parallelism offered
in FPGA architecture, they are able
to hugely improve on the latencies
offered in equivalent software
implementations, decreasing latency
by between 50 and 100 times – taking
it to nano-seconds.
The advances in FPGA technology
are such that it is now possible to
implement a firm’s credit limits and
total aggregate volume limits on
an FPGA. As new regulations such
as MIFID II kick in and as further regulations are introduced over the next
few years, financial institutions will have to implement more and more risk
checks. But of course no one wants to pay a linearly increasing latency
SANJAY SHAH
Nanospeed I
••
“WITH EFFECTIVE USE OF SUITABLY
RIGOROUS DEVELOPMENT AND TEST
ENVIRONMENTS, IT IS NOW POSSIBLE
TO SCALE UP THE COMPLEXITY OF WHAT
IS TARGETED TO FPGAS RELIABLY.”
••
REGULATIONCOMPLIANCE
IMPACTLATENCY
does not have to

4 5
SANJAY SHAH
Nanospeed
penalty. This is why I believe that FPGAs will become central to pre-trade and
post-trade risk management: in an FPGA all the checks can be implemented
in a massively concurrent way, massively reducing the processing time.
Doing 20 pre-trade risk checks for example, would not take much longer than
doing 10.
However, there is a trade-off to be made in terms of needing more logic real-
estate on the FPGA. We are in luck. Just like server CPU technology, FPGAs are
getting bigger and faster. For example, the forthcoming Stratix 10 FPGAs from
Altera will have up to 10 billion transistors compared to 5 billion in today’s
largest Intel Xeon CPUs. With effective use of suitably rigorous development
and test environments, it is now possible to scale up the complexity of what
is targeted to FPGAs reliably.
I believe that FPGA-based pre-trade and post-trade risk management
will become commonplace over the next few years. FPGAs offer trading
institutions the ability to outsource compliance to current and new
regulations effectively and reliably, all this with minimal impact on existing
infrastructure. The other benefits: you have a near zero impact on latency and
have that competitive edge.

4 6
>
MY FIRST TASK AT THE FIRST job I took in investment banking
technology was to read a paper describing a new model for
interest rates (Heath Jarrow Morton) and mine it for use in
swaption pricing software. It was illustrative of the start of
the art at the time: take some maths, create a valuation and
risk model, add a GUI and something in the way of booking
and portfolio management, and thus render it tradeable. The measure of the
value of the maths was the range of products it enabled you to trade.
Most of us with those roles eventually moved from small software firms to
large banks since they placed a high value on building in-house expertise to
offer new products faster than the competition. As markets got more technical
– both mathematically and technologically – several of us ended up moving
out of IT to run trading books.
The dynamic driving that career trajectory ended in 2008. The cause of this is
well illustrated by the fact (according to a Wall Street Journal writer interviewed
on the BBC World Service) that HSBC has around 25,000 staff working in
Compliance and Risk. This solidly shows the two central facts of banking
technology in late 2014: (1) the agenda is dominated by regulation, and hence
standardisation over innovation; (2) there’s no money left for anything else.
This has swept off the table IT investments in trading most complex products,
which are now variously illegal, unprofitable or unfashionable.
The trading businesses that are left can be divided into:
1. Those from which any spread has long been squeezed out, such as
Futures trading;
2. Those over which a cloud of regulatory uncertainty still hangs, such as
Spot FX and agency/algo trading;
3. Risky lending (Credit), which is the business regulators want the banks to
remain in (and from which almost all banking crises have sprung).
The consequence for IT departments is that they can no longer afford to
run deep benches of experts maintaining proprietary trading systems. A
positive result of this is a broader interest in fintech investments alongside
an emerging desire to re-think the process of innovation. Organisationally,
it has manifested itself within banks in the tendency towards empowerment
of IT Architecture functions (or “horizontals”) whose aim is to rationalise
IAN GREEN
eCo
THE NEW EQUATIONSOf
TECH VALUE
W

4 7
>
IAN GREEN
eCo
IT investments across the Product X Region matrix. Historically, these
Architecture groups have struggled to gain organisational traction since
they lack a natural constituency amongst the parts of the bank that cover its
costs. Now, though, they are amongst the least unrealistic of the desperate
measures invoked in response to the industry’s desperate times.
Naïvely, Architecture groups have the aim of identifying the best stacks of
software that a bank possesses, or could easily acquire, and standardising
as quickly as possible onto those. This is an obvious approach to cost
rationalisation. It is operatively how most Architecture functions at the largest
banks construe their task today.
While this is sensible, it misses the mark. A far more powerful goal is to re-
organise a bank’s software architecture so that as much as possible can be
flexibly sourced. This more sophisticated approach to Architecture treats
cost reduction as an industry portfolio question. Even if each of the Tier One
banks that is spending billions of dollars annually on technology moved onto
its own single stack there would still be a massive amount of duplication.
Furthermore, opportunities to learn and improve excellence by adopting
shared solutions would be lost. To unlock the maximum benefit banks have
to migrate away from the practice of developing non-shareable software and
establish the habit of successfully integrating software developed elsewhere.
The best stacks approach does not achieve this by design nor will it achieve
it by happy accident.
Exactly where this “software developed elsewhere” might come from is the
question of the moment. Some try to bypass it altogether by looking for as
a Service solutions in which either the bank’s software deployment footprint
(in Software as a Service) or operational footprint (in Business Process as a
Service) is significantly reduced. These ostensibly have both the emotional
benefit of minimising the collaboration burden and the tangible financial
benefit of making the bank smaller. However, they mask but do not avoid the
questions of exactly what the software does, exactly how you check and change
that and exactly how it interfaces to the software that you don’t outsource.
While potentially transformational in some areas, as a Service strategies don’t
reduce the centrality of implementation details - and since these become one
or two steps removed, the need for transparency can be even greater.
••
“A FAR MORE POWERFUL GOAL IS TO
RE-ORGANISE A BANK’S SOFTWARE
ARCHITECTURE SO THAT AS MUCH AS
POSSIBLE CAN BE FLEXIBLY SOURCED.”
••

4 8
Asalargebankinthequestfor a flexibly sourced ITarchitecture, the alternative
software authors of choice might well be other large banks. After all, they
are the firms who are also spending the most on banking technology and
have thousands of live applications. The cultural shift that is needed for such
banks to enjoy constructive discussions along these lines and then transact
with the speed and frequency to be mutually relevant will be well understood.
Also not to be discounted as “dark pools” of technology supply are the large
trading firms. They are notable both for agility and strength of technology, and
although they lack the breadth of the banks – which is how they can afford to
trade – they are a potentially significant part of the ecosystem.
If these are the dark pools, the light pools are the banking software community
whose assets are well advertised. Traditionally, the “software vendors” have
made their goods available only in closed (binary) form. While this can
work, it has historically presented problems of transparency, adaptation and
“vendor lock-in” and has lacked the plasticity that large firms need to embrace
software successfully as their own.
More recently firms such as Paremus, OpenGamma, uTrade and OpenFin who
have evolved in the Open Source era look to provide solutions that can be
adopted more organically in a complex environment. The optimal business
model for realising value from such firms is not yet robustly solved.
A flexible sourcing strategy that incorporates the IP of others while
simultaneously curating a distilled base of in-house software is tough to pull
off. It’s what we do now; it’s the rocket science of our times.
IAN GREEN
eCo

4 9
>
HE INCREASING REGULATORY PRESSURE ON THE BUY-SIDE
combined with the drive towards operational efficiencies
and requirements to deliver ‘’Best Execution” have
provided a heady cocktail of challenges for leading
Buy-Side firms to reassess their data and technology
infrastructure. Financial Technology spend is seeing an
increase within the buy side, this has impacted on FinTech Vendors who now
need to reassess their client base and solutions provided. Although single
asset class execution can be processed on independent OMS and EMS
systems (Order and Execution Management Systems) the complex search
for Alpha across all asset classes is now testing if traditional broker offerings
will meet the new challenges ahead. This at a time when businesses are
reducing resources and FinTech budgets when their regulatory obligations
are reaching an all-time high.
Buy-Side firms need to consider investing in independent FinTech vendors,
to address the new challenges. Growing demand for fast accurate analytics
and risk management increases the need for a seamless integration of work
flow processes across the trading cycle, from the Front to the Back Office.
Only serious investment in new technology should now be considered.
The drive to expand into new markets and asset classes creates further
challenges on the regulatory front. From MIFID to Dodd Frank, EMIR to
MAD and AIFMD, what appeared to be minor operational details are fast
becoming major changes in FinTech requirements and work flow processes.
Until now, Buy Side technology has focused entirely on Front Office
trading with adaptation of EMS algorithms, smart-order routers and TCA
(Transaction Cost Analysis). We are now seeing a growing need for full Front
to Back Office collaboration and the fear of non-compliance placing a strong
focus on the real need to invest in Back Office technology.
Historically OMS and EMS have had different technologies however,
now both systems are developing increasingly overlapping functionality.
OMS is a complex system and usually imbedded deeply into the Buy
Side infrastructure for portfolio construction, attribution, reference data,
compliance, risk management, order processing etc. In the meantime, EMS
has evolved from a growing need for trade execution efficiency and speed
across multiple order types and new destinations.
ANTONIO
CIARLEGLIO
Harrington Starr
OMS
-
TO INFINITYAND BEYOND!
T

5 0
>
As Buy Side and Sell Side firms start to consider platform consolidation, it
is not a simple decision based on factors such as features, benefits or price,
it is a matrix of factors, including charging mode - per seat / user, consulting
services, connection fees, technology, data integration, multi-asset class
access, to name a few and not forgetting cost of ownership.
The strength of OMS is in the depth of functionality, robustness and
support, however, the potential for EMS differentiation also lies in added
value analytics and enriched data. Even though there are clear market
leaders in both OMS and EMS providers, it will be the seamless integration
of combining EMS and OMS functionality which will permit the Buy Side
leverage real value.
Individually an OMS or an EMS cannot offer a one stop solution, but the
ability to integrate will be the key differentiating factor.
OEMS - THE FUTURE!
The Buy Side has always provided challenges and
new opportunities to FinTech vendors offering new
OMSandEMScapabilities.BuySiderequirementsis
constantly moving depending on where and what is
traded, trading speed and volatility, how many asset
classes and trading strategies. FinTech Vendors
can no longer develop technology led products
in attempt to be an all to all Buy Side provider,
or reduce the capabilities of EMS. Consolidation
however of OMS and EMS offers key benefits, for
the Buy Side needing to trade multi assets, manage
portfolio risk in real-time, ability to customise
algorithms, manage execution destinations and
using data analytics within the trading process
will require complex event processing modelling.
The integration of the ‘’best in class’’ OMS and
EMS in a cost effective ‘’market led’’ solution will
win the battle. Fin Tech Vendors who offer a ‘’real
story’’ and provide advanced market led technology
combined with a lower cost of ownership will gain a
competitive advantage.
FROM SELL SIDE TO BUY SIDE
Traditional broker relationships are also being redefined due to changes
in market structure. Buy Side firms will always rely on a ‘’High’’ and ‘’Low
Touch’’ Sell Side services for liquidity, how these services are delivered will
undergo transformation. Increasingly Asset Managers will rely on their own
resources to develop execution strategies, increase their understanding of
how algorithms work and manage their own risk. The resulting Buy Side
evolution of ‘’OEMS’’ will leap beyond Sell side applications in providing
platform integration, and the addition of decision support tools from
pretrade analytics to real-time execution across multiple-asset classes.
AI (Artificial Intelligence) must be included to provide shorter term Alpha
capture enhancing trading execution strategies.
••
“THE STRENGTH OF OMS
IS IN THE DEPTH OF
FUNCTIONALITY, ROBUSTNESS
AND SUPPORT, HOWEVER,
THE POTENTIAL FOR EMS
DIFFERENTIATION ALSO
LIES IN ADDED VALUE
ANALYTICS AND
ENRICHED DATA.”
••
ANTONIO
CIARLEGLIO
Harrington Starr

5 1
EMS having dominated in playing a key role as an Independent provider to
calculate, deliver and monitor trading algorithms from a variety of providers,
the movement to e-trading FX and Fixed Income products is leading to new
requirements such as interoperability and collateral management.
Additionally the need to monitor risk effectively is moving from traditional
risk assessment, for example; growth, leverage or yield to more complex
strategies based on credit exposure, volatility and options expiries, OEMS
solutions must begin to focus on trade support, trade processing, portfolio
management, risk and compliance.
PLATFORM EVOLUTION - BUY SIDE
Regulatory complexity is increasing and the move to trading across multi
asset classes across new markets is creating a real need for different systems
to communicate as one, Front to Back and globally. Whether it is London
Traders calculating real-time exposure risk in Brazil, to the latest Post-Trade
reporting requirements of Compliance, the Buy Side requirements are
growing beyond the Single Asset system. And with more trading functionality
available to Buy Side firms, combined with dynamic free flow of data
throughout the lifecycle of a trade, will facilitate data consistency, accuracy
and seamless integration between combined OMS-EMS systems.
Institutions will begin to reduce costs and complexity, therefore platform
consolidation across multi asset classes and markets will become a natural
solution. Although management reporting and accounting aspects of OMS
systems will remain beyond the scope of OMS/EMS hybrids, platform
consolidation will continue as cost reductions and the use of a single OMS-
EMS system increasingly becomes the ‘’Holy Grail’’ for the Buy Side.
ANTONIO
CIARLEGLIO
Harrington Starr

5 2
>
RADING BUSINESSES RELY ON MATHEMATICAL MODELS ACROSS
the entire value chain—examples include deriving forward
curves; pricing deals and calculating risk sensitivities. This
dependency on models brings with it challenges around
developing, deploying and using them:
■ Developing and deploying models quickly is key, but often impossible
within the framework of existing trading and risk management systems.
■ Access to the right input data is often a big challenge.
■ Models are often compute-intensive, making efficient use of available
server resources vital.
■ Separation of data access, presentation and model algorithms is good
practice and promotes maintainability and reuse, but it’s often not practical
with the technologies used (eg, Excel).
■ Model developers need flexibility to use their preferred technologies
(MATLAB, Excel, F#, etc).
■ Lack of version control, security and audit history bring significant
operational risk.
A typical scenario involves quants developing models for various purposes
(eg, optimisation, pricing, risk), often using different technologies (eg,
MATLAB, Java, Python, C++). Quants spend a lot of time on routine tasks
such as connectivity to data sources, handling security and running models
in parallel. These tasks detract from doing the job that adds the most value
to the organisation—implementing mathematical models. The infrastructure
available to run models is often far from Enterprise Level. Production runs
might be performed on a user’s PC and it can be unclear which version of a
model produced which result, causing problems with audit and traceability.
Modelling platforms can be developed that address these issues. They
provide a set of generic, shared services used to support any model-based
process. This increases the return on investment of the platform, since
it can be reused across the organisation. With an agile approach to
MARTIN
CHEESBROUGH
Digiterre
IMPLEMENTING
QUANT MODELLING
PLATFORMS
T

5 3
>
MARTIN
CHEESBROUGH
Digiterre
development, these services are built in short iterations and grouped into
releases that allow value to be delivered quickly.
A typical modelling platform consists of four major components.
Model Management: Provides facilities for storing the models developed by
quants with full version control and permissioning. This means that it is easy
to control who can update which models and see who has done so in the
past. There is never any confusion over which is the latest version of a model.
Model management also includes facilities to capture meta data for each
model—such as environment prerequisites and the parameters it needs in
order to run.
Runtime Environment: The environment within which models are executed.
This typically makes use of a high performance computing architecture
to enable models to be run in parallel over multiple nodes. The runtime
environment provides a host container for each model technology supported
by the platform—eg, Java, MATLAB or C++. The rest of the architecture can
then remain independent of the model technologies in use.
Data Federation Services: Provides an abstraction layer on top of the
organisation’s data sources. These might include internal databases and
external data sources such as Reuters. This decouples the models from these
underlying data sources. The Data Federation Services layer determines
which data source to access in order to retrieve the data needed by a model.
This has advantages in terms of future scalability and flexibility and removes
some of the more mundane tasks for the model builders.
Model Data Store: This is specifically designed for storing the large volumes
of time-series data consumed by and generated by models of this nature.
This typically involves manipulating large matrices of data. The Model Data
Store is optimised for reading and writing such data and does not impose
any specific structure on the data that a model uses.
Moving from a starting point with many models running in different
environments using different technologies to a single, fully featured
modelling platform can require a considerable investment. Attempting to
make the leap in a single step is costly and risky. However, the implementation
does not have to be tackled in this way.
A phased approach to implementation allows the organisation to evolve the
solution in-line with business priorities. Such an approach should start by
identifying a long term vision for the modelling platform that clearly lays
out the objectives. This can then be refined into a prioritised “backlog” of
features that will form the roadmap for development. This should be done
with the recognition that things will change as the programme unfolds and
people use the platform and re-prioritise.
From the backlog the initial phase can be scoped. This should focus on a
small number of features that will add value but will not take too long to
implement. The first phase should focus on one or two models and preferably
those that are well understood and for which the source data is readily

5 4
available. Otherwise there is a risk that the combination of developing new
features at the same time as redesigning a complex model and rationalising
data sources will cause the project to grind to a halt.
Further phases can then add more features, with the backlog being
reprioritised at each stage. Releases should be kept to approximately three
months duration to maintain momentum. Adopting an agile approach
combined with techniques like continuous integration and test driven
development shorten the feedback cycle further. This ensures there is
constant collaboration between the development team and the business.
In summary, a modelling platform is an environment within which model
developers can construct complex models based on consolidated enterprise
data, test them and release them into production where the results can be
used for business decision making. The benefits are:
■ A common interface to data held in multiple repositories to reduce the
time and effort spent building models and accessing results.
■ The capability to manage distribution of model executions across servers.
■ History of model execution results and input parameters automatically
stored.
■ A scalable solution that evolves with the business, availability of data and
expertise within the organisation.
■ Controlled access so only approved models run in production; changes can
be tested and authorised and models only run when they should.
With this approach model developers are empowered and can focus on
where they add value to the organisation.
MARTIN
CHEESBROUGH
Digiterre

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5 6
>
VER THE PAST YEAR THERE HAS BEEN A FLURRY OF ACTIVITY AS
Banks prepare for the introduction of the Volcker Rule in
July 2015, which will mean that they can no longer carry on
certain types of Proprietary Trading. The main question that
has been asked is what is going to happen to the current
teams and traders – are the banks going to find a way to
ring fence them or are they going to set up shop on their own?
The answer is mixed and there have certainly been examples of both over the
last year. One of the most recent news clips has been that RBC has declined
to spin out their proprietary trading unit, having looked at investing nearly
$1 billion dollars in a hedge fund. However, there have been examples of
other firms being formed from within Investment Banks, most high profile of
which are nQuants from Barclays and Societe Generale, who are planning on
spinning out their proprietary trading team.
There has already been considerable rhetoric written about how this will
affect market making, with arguments made that it could either be negative
or won’t have an impact at all. However there is another question that I
think is worth asking, when these new entities start springing up how are
they going to affect the technology used and the individuals who use that
technology?
TOM KEMP
Harrington Starr
What effect has the Volcker rule had on
Proprietary Trading and start up funds?
HOWWILLTHIS
AFFECTFINTECH?
O
••
“THE MAIN QUESTION THAT HAS BEEN ASKED
IS WHAT IS GOING TO HAPPEN TO THE CURRENT
TEAMS AND TRADERS – ARE THE BANKS GOING
TO FIND A WAY TO RING FENCE THEM OR ARE
THEY GOING TO SET UP SHOP ON THEIR OWN?”
••

5 7
TOM KEMP
Harrington Starr
Well for a start these teams within the banks have always had a terrific
reputation when it comes to technology and are seen as a shining light in an
occasionally stagnant investment banking environment. So now these guys
are becoming independent they will have even more freedom to experiment
and come up with new and different ways to make the most out of their
technology. It’s entirely feasible that we could see a real change in the
established market players as these firms no longer become constrained
from the institutions that they sit in.
It’s also going to increase competition for the best Developers and PhD
candidates as Banks and existing Hedge Funds face competition from these
new firms. Very talented technology candidates want to work somewhere
they can solve the most complex problems and have the freedom to come up
with innovative solutions, so these new prop trading firms will be the perfect
destination.
Moreover once they get their hands on this opportunity and start using
automated, systematic and quantitative trading without the previous
problems that could be thrown up within an Investment bank, what is going
to happen? We’ve already been in a technology arms race for most of the
last 10 years, just look at the money spent by HFT Traders on hardware
and software, but this could mark another stage of it. By forcing the money
outside of investment banks and into the hands of extremely smart people
with little regulation then expect the arms race to reach another level.

you
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5 9
ETRM/CTRM
EdwardStock–ArtaoisLtd
AndrewdeBray–FactumLtd
RichardKidd–Planlogic
AndrewThomas–HarringtonStarr
LudwigClement–CTRMForce
DrGaryM.Vasey&PatrickReames-
CommodityTechnologyAdvisory
JulianEyre–Openlink

6 0
>
HE QUESTION FOR START-UPS TRADING ENERGY AND
commodities is rarely one of “which is the most expensive
risk management system available?” For potential new
entrants involved in trading, the “ETRM/CTRM system” may
well be kept within the bounds of a spreadsheet marking
unhedged positions to market (MTM) and then a potential
stop loss on these positions. With the basics in place the next steps for
most companies is to look at the Value at Risk (VaR) position. I believe this
calculation to be widely underused as a passive measurement. Investment
into VaR calculations can be made more attractive if the calculations are used
as an active measure and driver in the risk policy.
PASSIVE VAR
Value at Risk (VaR) is the most common form to determine the volatility of the
market and the changes expected to a MTM position using either analytical,
historic or Monte Carlo simulation. In short terms the measure gives the
user an indication to an industry standard 95% confidence of the change
in the value of a portfolio the following day. The user should also bear in
mind that there are a further 5% of possibilities that may contain so called
“fat tail” risk. The use of VaR is used by most companies as a passive tool for
risk measurement, driving the controls established as VaR limits. I believe
that VaR can also be used as an active measure of market volatility helping
to establish the profitability of new markets and establishing the amount of
Capital at Risk (CaR) a company may have.
INCORPORATING A CORPORATE LIQUIDITY FACTOR
One of the issues with VaR is that it looks only at one further day of risk. It
has become established that, using a square root of the number of days, VaR
can be escalated to show the losses over the same number of days. This is
important as we can use this function to take into account inherent risks in
portfolios lead by either an inability to hedge quantities unit for unit, (owing
to differences between physical positions held and the contract sizes of the
financial tools to hedge them) or by incorporating liquidity risk into the
calculation. A Corporate Liquidity Factor can be determined to establish the
number of days required to unwind positions, depending on the size of market
position and market liquidity. Then by using the same square root of number
of days calculation, the exposure to the moving market can be more accurately
identified. In the case of physical trading it may reflect the time needed
EDWARD STOCK
Artaois Ltd T
Embracing
VALUE RISKat

6 1
EDWARD STOCK
Artaois Ltd
to liquidate cargoes or move physically stored commodities. As with all risk
management tools, an element of stress testing should also be incorporated.
RISK CONTROL: TOP DOWN OR BOTTOM UP?
Once the metrics for measurement have been established, then a set of
controls can be added to them. In simple terms stop losses can be put in
place to establish actions to be taken in the event that a MTM loss becomes
too large. A more dynamic approach is to establish limits in relation to VaR,
thereby controlling the risk of losses in relation to market volatility either over
the following day or in relation to the corporate liquidity factor. The setting
of VaR limits can be done from two directions. There is a top down approach,
where VaR is established as a percentage of a set CaR value. In the case of pure
trading companies, the CaR could be considered as the investment capital.
In the case of physical companies the CaR may be defined by any inherent risks
in the portfolio, including basis risk or the need to hold stocks of commodity
for delivery to end users. From the inherent risk starting point a bottom up
approach may be established to look at the minimum VaR a company needs to
operate at or is exposed to and then to establish what that may mean in terms
of CaR and the provisions a company needs to establish to manage these
eventualities. It is then a simple calculation to establish whether a company
can financially bear the losses in relation to its net worth.
DETERMINING TRADING STRATEGY EFFECTIVENESS
VaR can also be used as a measure to determine the minimum risks a company
should be taking as a measure of trader efficiency. A trader may either be
managing portfolio risks to maintain margins or seeking controllable risks
to create profits. A trader meeting target profits without full use of the VaR
allocation is, by definition of the relation of VaR to CaR, causing capital to be
tied up unnecessarily which could be used more effectively elsewhere. On the
other side of the equation, a trader who is continually using his VaR limit, but
unable to make targeted profits may be constrained by low market volatility,
not allowing a successful trader to reach desired profits. If this is the case,
decision time is upon us. Do we make available more capital or establish that
the returns in relation to CaR are so low that the market is not one to be active
in? In the latter we can use the VaR calculation to establish potential earnings
from a different market, if the data is available, to determine a balance between
potential earnings and return on the CaR.
The subject of VaR limits among traders is emotive and often sits high in the
table of “mine is bigger than yours”. Size is not everything and over allocating
VaR in comparison to the volatility of a market is as bad for a business as
setting profit targets that are unachievable given the market volatility. To keep
the limits effective, they should be revisited on a frequent basis in order to take
into account the changing nature of the market.
CONTROL IS NOTHING WITHOUT POWER
Having the control measures in place are not sufficient to lead a successful risk
control policy in themselves. The controls will need a robust operational risk
policy in place to establish controls around the actions when risk limits are
breached and in the event of nefarious trading strategies, effective sanctions
are also established.

6 2
>
HE PERSONAL CONSUMER’S DEMAND FOR NEW PRODUCTS
and the technology supplier’s ability to provide them is
advancing at an unprecedented rate. This never ending
growth cycle is fuelled by expeditious change in the quality
of efficient, intuitive and visually appealing software, the
unit size to weight to processing power ratio (Moore’s Law is
still holding true after 50 years) and also screen resolution, memory capacity,
battery life and the existence of ubiquitous high availability, performant wi-fi.
But this change is sufficiently powerful now it is causing something of a
snowball effect. The growth of the personal consumer market means the
technical literacy level is increasing across all demographics, but growing
fastest in the 15 - 30 age range – the workforce of tomorrow. As employees
expect the same standard of technology in their personal life as in their
employment IT infrastructure, it is in turn leading to evidence suggesting that
the hardware and software cycle is reversing. Older, more established hardware
and software providers are being driven to change, rather than the legacy
position of their ideas and approaches being considered the benchmark to be
measured by.
On the hardware side, some form of tablet, phablet, or mobile interaction is
expected. For the main workstation, more portable, powerful machines and
larger displays to present any output are a minimum requirement.
For software, graphical representations replace columns and rows of data.
Analytical tools need to be highly customisable and flexible enough to “slice
and dice” the application’s entire dataset (or ideally other applications’
datasets also), enabling fast and tailored data mining, rather than the endless
customisation of canned reports and disparate but stitched together data
consolidation. Navigation needs to be intuitive and efficient, not clunky nested
point and click menu paths.
And for the diehard IT types out there, as well as the above, applications
need to be fast, hardware efficient, easy to install and maintain, secure and of
course defect free. And if they aren’t defect free (heaven forbid), they need to
be architected to be easy to patch, upgrade or hotfix with minimum downtime,
regression testing or impact to the user community.
ANDREW DE BRAY
Factum Ltd T
A R E W E
ABOUT TO WITNESSan
EXTINCTION LEVEL EVENT?

6 3
ANDREW DE BRAY
Factum Ltd
Essentially, the influence of the consumer on their workplace IT is higher and
the ETRM industry is no exception. There has previously been some drive to
make established E/CTRM applications look, feel and behave like consumer
software, to perform at speeds consumers are used to and overall to give that
feeling of comfort, but the rate of change was slow and the incremental benefit
was small.
But now there is an emergence of a new breed of application – designed with
efficient and extensible data models, for distribution via the internet, working
as a truly modular set of separate but integrated applications, optimised for
modern hardware and easier to support, maintain and deliver under a SaaS
model. It looks and feels new generation because it is new generation, not a
mature product being cut up and welded together into something that looks
fit for purpose.
The underlying point is not change itself, but the increase in pace and breadth.
Some believe that the pace is such that change within E/CTRM is faster than
the evolution cycle currently supports and there is a distinct view forming that
at current rates, some products will get left behind. If the rate of change is
faster than they consume, they just cannot evolve as fast as the rest, effectively
committing themselves to extinction. If the characteristics of change are fast
and broad enough, to improvise, adapt and overcome are no longer enough to
even keep you in the race, let alone lead the field.
But that view is not held by all. Just like statistics, you can sift through the data
and come up with a very different answer.
There is nothing in reported buying behaviour that suggests any product is in
terminal decline, or that any new product is making market changing advances.
Demand for proven applications on proven technologies is just as high and
the mature provider’s ability to enter new markets, evolve their products to the
new challenges of consumers and in general be of sufficient fit to requirements
is enough to keep them in the game.
Furthermore, when coupled with other perceived trends, such as the need for
increased IT security, the in-housing of previously outsourced IT due to service
quality decline, the increase in hardware virtualisation and remote desktop
availability, and high levels of system integration, the habitat for the mature
product actually seems to be thriving.
With such a compelling argument for both sides, it is not easy to pick a victor.
However, if an accelerating rate of technological change is truly the catalyst for
an extinction level event, we may not have to wait too long. The question is -
will we see the elders slip to the back of the herd, unable to keep up and falling
further and further behind until they are picked off one by one until none are
left? Or will we see the E/CTRM environment continue to be populated the
perfect survivors – only changing, adapting and fine tuning over time enough
as needs demand, and continuing to feast on those who rush too far out in
front and disappear before anyone has had a chance to notice they existed?
Survival of the fittest is underpinned by the principle that only those most
suited to the environment they inhabit will live on…

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REATING A CENTRE OF EXCELLENCE WITHIN YOUR ORGANISATION
to manage your CTRM system can help you make the most
of your skilled in-house staff. Better user engagement is an
important benefit of this approach, and in turn this helps to
reduce costs and timescales and improve efficiency.
When the dust clears after a new CTRM implementation or upgrade, who
is left to keep the momentum going? Are expensive consultants and
unfulfilling service agreements here to stay in these cost-conscious times or
are there ways for commodity trading organisations to carry the flag forward
themselves?
The CTRM vendor space is changing with newer, more nimble vendors
entering the arena offering lightning-fast implementations based around
options such as Software as a Service (SaaS) and the promise of integrated
mobile commodity trading and risk management apps. The more established
vendors are fighting to maintain their former positions of dominance as
technology changes and client demands become more astute.
While financial IT spend is predicted to rise1
there is a coming squeeze
on knowledge and expertise within the CTRM technology space. As major
upgrades and implementations consume the availability of “experts” within
energy trading IT, commodity trading organisations will find it increasingly
difficult to secure sufficient resources with the capability to initiate and
complete their own projects.
One path available to trading organisations is the creation of an internal
Centre of Excellence (“COE”) for trading technology within the organisation.
In parallel with a system implementation or upgrade, the organisation looks
to round out the project by forming an in-house Centre of Excellence drawn
from across the spectrum of internal stake-holders. This will have the future
effect of reducing dependence and costs of external consultants will engaging
and empowering in-house staff with the system and process knowledge.
Product Champions are pivotal to creating a COE. These are individuals
who will attract staff into their orbit with a compelling understanding of
business processes and systems within the project remit. The Product
Champions possess sound domain and high-level technical knowledge
RICHARD KIDD
Planlogic C
W E L C O M E
CTRM
to your new
CEN
TRE OF EXCELLE
N
CE
1 “FS sector to
spend more on IT as
confidence returns,
says CBI/PWC”,
bankingtech.com,
6 October 2014

6 5
RICHARD KIDD
Planlogic
that can be shared and used to support those around them during the cycle
of implementation, testing and ultimately successful project completion.
Some suggested targets to aim for during a system implementation or
upgrade that can help form a COE include:
■ Focus on learning and developing together into a Centre of Excellence
■ Controlled, focused and inclusive processes led by Product Champions
■ Quickly identify Super users who can extend system knowledge across the
business
■ Understanding and aligning the disparate elements of each level of a
trading business
■ Working in small increments in an agile manner with a defined process for
setting aside or resolving obstacles
■ Ensure that success is acknowledged and issues are not seen as
insurmountable or having wasted participant’s time
■ Using social media and cloud to organise, encourage and promote the
achievements of the COE members during the project lifespan
Having the members of the COE actively buy in to these objectives is
crucial to the project’s success, overcoming the natural position to resist
anything deemed outside their “day job”. Develop trust and confidence in
the technology and you will see stimulation and success for those involved.
The benefits will be evident in shortened delivery timeframes, reduced risk
and reduced overall IT spend on both external and internal resources.
PANTONE®
801
PANTONE®
655
Planlogic Logo Concept_#4
October 2012
Creating Clarity

6 6
>
ANDREW THOMAS
Harrington Starr
NYONE WHO WORKS IN THE ENERGY & COMMODITIES TRADING
Risk Management Space will more than likely know that at
the moment it is a candidate driven market with candidates
regularly receiving multiple job offers and companies
struggling to fill positions.
Now those candidates are in that position for a number of reasons, but I
believe that the main reason for this is that the companies in our space are
doing extremely well, meaning that they are looking to grow.
Because of this I thought I would write an article on a closely related industry!
A number of recent studies have recently confirmed what everyone in oil and
gas already knew;
THERE IS AN ONGOING SHORTAGE OF TECHNICAL TALENT.
Booz Allen (now PWC) recently noted that ‘more than 50% of workers for oil &
gas companies including contractors will retire in the next 5 to 10 years. Also
worth noting is that based on a recent survey the average age of Operator
Technicians is 45!
Difficulty in attracting new talent has been a problem across the Oil & Gas
industry in the United States, Canada and other developed countries. After
speaking to people in the industry I believe there are various factors driving
the industry’s failure to attract and develop new talent.
A few of the challenges developed countries face today from my perspective
are listed below;
Perception about the Industry: Young graduates see the oil and gas industry
as old and mature and as being seniority based, thus making them feel it
takes a lot for them to break through and find advancements in their career.
Shortage of qualified engineers: Overall students studying science and
engineering fields might have increased but finding high quality candidates
is always a challenge. Overall the US is graduating less than 60,000 engineers
annually, (Europe is approximately producing nearly over double that figure
with 140,000 engineers annually)
A
TALENTSHORTAGE
g l o b a l o i l a n d g a s
I N D U S T R Y
Ongoing
in

6 7
People Development: Many oil and gas companies have failed to create
formal career paths and people development structure and plans. The main
strategy up until today is “On-the-job” training as the primary development
process. This is not necessarily a problem with Oil Majors but is a definite
problem with the other oil service firms.
Lifestyle choices: Although Oil & Gas firms try to compensate their
employees for the lifestyle disruption occurred working for them, it is getting
harder to keep the work force motivated.
In contrast to the challenges faced by companies in the developed world, in
countries like Nigeria & Angola the oil industry is viewed as highly desirable
work. In these countries international oil companies and oil service firms
compete for talent with national oil companies, which generally have higher
salaries, incentives and job security (comparatively). As a general trend most
of the national oil companies are expanding internationally which provides
premier growth opportunities.
NOW FOOD FOR THOUGHT, OR ALTERNATIVELY A
QUESTION FOR EVERYONE READING THIS ARTICLE;
■ How do we ensure that we learn from the Oil & Gas industry and keep
attracting the younger generation into our Energy & Commodity Trading, end
users, consultancies and vendors?
■ How do we ensure that the London Fintech scene is still thriving long after
we have we are sat in our rocking chairs moaning about the youth of today?
Written by Andrew Thomas with the help of Ganesh Natarajan
ANDREW THOMAS
Harrington Starr

6 8
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IG COMMODITY TRADING HOUSES USUALLY HAVE THEIR
internal resources to manage a CTRM (Commodity
Trading & Risk Management) selection process and
implementation: they have Project Managers, Business
Analysts, legal and procurement department as well as
the know-how to conduct such project. However smaller
companies might be lost when looking at the different systems available on
the market and tempted to proceed with limited resources. On one side, the
Buyer has high expectations and on the other side, the Vendor believes his
product is the best. Therefore, Traders need guidance to navigate in what is
called Project Management and CTRM Implementation.
Trading Houses are used to manage their risks (market, credit, liquidity,
operational) on a daily basis, but what about risks involved when selecting
and implementing a CTRM?
At CTRM Force we believe CTRM implementation should be handled by
experts who have experience in both commodity trading and CTRM systems
and who apply a standard Project Management methodology to avoid project
failure (e.g. from the Project Management Institute - PMI).
PROJECT PHASES
There are a number of approaches for managing project activities including
lean, iterative, incremental, and phased approaches. Regardless of the
methodology employed, careful consideration must be given to the overall
project objectives, timeline, and cost, as well as the roles and responsibilities
of all participants and stakeholders.
Project management is accomplished through the appropriate application
and integration of logically grouped project management processes:
1. Initiating
2. Planning
3. Executing
4. Monitoring and Controlling
5. Closing
LUDWIG CLEMENT
CTRM Force B
MITIGATE RISKS
SYSTEM
IMPLEMENTATION
HOW TO
D U R I N G A C T R M

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LUDWIG CLEMENT
CTRM Force
Mapped to these five Process Groups are ten project management Knowledge
Areas. For a successful implementation they should be in a way or another
taken into account:
1. Project Integration Management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Quality Management
6. Project Human Resource Management
7. Project Communications Management
8. Project Risk Management
9. Project Procurement Management
10. Project Stakeholder Management
IMPORTANCE OF A GOOD START
The initiating process determines the nature and scope of the project. If
this stage is not correctly performed, it is unlikely that the project will be
successful in meeting the business’ requirements. It is key to understand
the business environment and make sure that all necessary controls are
incorporated into the project. Indeed, the initiating stage should include a
plan that encompasses the following areas:
■ Analysing the business needs/requirements in measurable goals
■ Reviewing of the current operations
■ Financial analysis of the costs and benefits including a budget
■ Stakeholder analysis, including users, and support personnel
for the project
■ Project charter including costs, tasks, deliverables, and schedule
It is important to bring on board all the stakeholders of the project at the
very beginning, as well as determining the Critical Success Factors that will
be validated at the end of the project.
MANAGE THE RISKS
Seek out potential risks, their impact, and their likelihood of occurring.
Encourage all interested parties to develop strategies to mitigate the risks.
Every organization has at least 1 naysayer, who can cause a lot of problems,
but who is also very knowledgeable. The naysayers must be included in
the risk management process. By getting their input early, you can avoid
problems and you effectively limit their negativity.
PLANNING
PROCESSES
EXECUTING
PROCESSES
INITIATING
PROCESSES
CLOSING
PROCESSES
MONITORING AND
CONTROLLING PROCESSES

7 0
CHARACTERISTICS OF THE PROJECT LIFE CYCLE
Thegenericlifecyclestructuregenerallydisplaysthefollowingcharacteristics:
■ Risk and uncertainty are greatest at the start of the project. These
factors decrease over the life of the project as decisions are reached and as
deliverables are accepted.
■ The ability to influence the final characteristics of the project’s product,
without significantly impacting cost, is highest at the start of the project and
decreases as the project progresses towards completion.
This illustrates the idea that the cost of making changes and correcting errors
typically increases substantially as the project approaches completion.
SUMMARY
At CTRM Force, we believe the key success factors for a
CTRM implementation are:
■ Appropriate resources on both sides - Client/Vendor - with identified roles
and responsibilities for PM and BAs
■ Appropriate Project Management methodology (PMI, Prince 2 etc) including
a risk plan and excellent communication plan
Finally, it is the responsibility of the Project Manager to deliver a successful
CTRM on time and within budget; his communication skills will be a key
asset to succeed.
LUDWIG CLEMENT
CTRM Force
LOW
HIGH
RISK AND UNCERTAINTY
COST OF CHANGES
Degree
Project Time

7 1
HE $1.6 BILLION COMMODITY TRADING AND RISK MANAGEMENT
software(CTRM)marketis,ofcourse,amirroroftheindustry
it serves, and the suppliers of these critical systems and
their software, are continually impacted by changes in the
commodities trading world. In the past, deregulation, the
collapse of the merchants, the emergence of commodities
as an asset class for investors, and other similar disruptive events, have had
significant impact on this software category. As 2014 draws to a close, we
take a look at the big issues facing the industry today.
1. COMMODITIES FOR INVESTMENT?
All things go in cycles and it is especially so with commodities. Developing
supplies of natural resources requires time and money, and changes
in demand will rarely be in lockstep to changes in supply. As supply
infrastructure investment increased to meet forecasted growth in demand for
all commodities, the sustained recession that began in 2008 in North America
and Europe and moderating growth in Asian economies weakened demand,
leading to softening prices and lower volatilities. With low volatility, most
commodity investment vehicles have performed weakly, leading to a large
scale exodus of investments in the asset class; some $50 billion in 2013 alone.
2. TUMBLING PROFITS LEAD TO A MARKET EXODUS
The revenues of the ten largest banks fell from $14.1 billion in 2008 to just
$4.1 billion last year and profits at large traders like Glencore, Cargill, and
others are also well down from earlier highs. With the decline in commodity
prices in the last couple of years, many producers are struggling and even
some utilities, usually the bastions of guaranteed returns, are losing
money. Meanwhile, trading commodities is an increasingly capital-intensive
business and the traditional sources of finance capital, the banks, can get
a better return elsewhere at the moment. There is still money to be made
in commodities for those who can weather the downside of the cycle by
containing costs and putting into place the appropriate IT solutions and
business processes to profit not just when the cycle swings back, but can
provide them the ability to find opportunity through improved market vision
in uncertain times.
3. OVERSIGHT AND REGULATION
Banks have been among the first and most obvious casualties of new
DR GARY M.
VASEY &
PATRICK REAMES
Commodity
Technology
Advisory Llc
T
F I V E
IMPACTING
B I G I S S U E S
C T R M S O F T W A R E
>

7 2
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regulations. The regulators’ crosshairs have catalyzed a movement out of
commodity trading by the banks as invasive oversight has combined with
falling profits. The fundamental impacts of this exodus are debatable, but
many agree that systematic risks are simply being moved elsewhere while
liquidity is being eroded. Who will replace the banks, and how quickly?
What impacts will this reshuffling of market power and liquidity have on the
broader commodities markets, and by extension, the suppliers of technology
solutions to that market?
4. BIG DATA
The early vendor-supplied ETRM systems, those servicing natural gas trading,
were primarily oriented to the after-the-fact capture of daily volume and
price. As the commodity trading industry has evolved, and the ETRM/CTRM
has become more of a data hub for traders, the amount of data generated
internally and streaming into trading shops (and sometimes their systems)
from the outside has exploded. Much of that data is complex – including
time series data, price structures, contract terms, document images,
Instant Messenger logs, phone records, and
increasing amounts of other non-standard
data. With the increased regulatory focus
on transparency, we can expect even more
data of all types flowing in and out of trading
shops…all of which needs to be captured
and retrievable.
Beyond the traditional sources of market
intelligence,companiesareincreasingviewing
social media as a relevant source for market
information, and are incorporating those
sources into the formation of their strategies.
However, Social media is problematic as its’
reliability can be questionable (much of it is
opinion based on little of no factual basis),
and there are an almost infinite number of
sources. Nonetheless, intelligence gathering
and analysis is a key part of any commodity trading shop’s edge, and social
media increasingly forms a part of this intelligence gathering activity and
needs to be within an overall data management strategy.
Dealing with Big Data will require new technology approaches that can
analyse terabytes of data and identify truly relevant trends and correlations
contained within it. In a thin market where profits are increasingly difficult
to find, those who can gain control of the flood of data and can find within it
true market advantage, will be the big winners.
5. NEW MARKETS, NEW REQUIREMENTS
The market for ETRM/CTRM software has been growing, though unevenly,
over the last several years, with software vendors’ revenues riding the waves
and enduring the troughs of the broader commodities markets. ComTech
estimated the CTRM software market to be worth some $1.6 billion annually
in 2014 and the broader Commodity Management software market may
indeed be several multiples larger.
••
“IN A THIN MARKET WHERE
PROFITS ARE INCREASINGLY
DIFFICULT TO FIND, THOSE WHO
CAN GAIN CONTROL OF THE FLOOD
OF DATA AND CAN FIND WITHIN IT
TRUE MARKET ADVANTAGE, WILL
BE THE BIG WINNERS.”
••
DR GARY M.
VASEY &
PATRICK REAMES
Commodity
Technology
Advisory Llc

7 3
In particular, the software category is shifting from one focused on capturing
and managing trading transactions, to something different – a central
trading hub providing near real-time analytics and facilitating true market
intelligence; ultimately providing users the tools that they need to quickly
identify trading opportunities, address operational risks, and ensure
compliance with regulations. That’s a tall order but one that many of the
vendors are already pursuing.
MEETING THE CHALLENGES WITH TECHNOLOGY
As the fundamental conditions of commodity transacting change and
oversight becomes more invasive and intense, visibility across all aspects of
the business must improve:
Market visibility – market awareness driven by data and a vigilant eye on
macro trends. Strategies must be formulated around those macro trends and
managed on market data and real-time or near real-time analysis,
Internal visibility – profit is made or lost on daily decisions. Accurate and
timely position management, risk management and business intelligence
support is key to ensure opportunities are exploited and risks addressed,
Regulatoryvisibility–regulatorswillbequicktomoveandonceontheirradar,
businesses will be the target of scrutiny for a very long time. Developing a
culture of compliance and improving visibility for regulators is key to avoiding
punitive and damaging enforcement actions.
The chances of succeeding in this market are increasingly dependent upon
the use of sophisticated trading technologies that can address these big
challenges. As such, and much like the traders that earn their living in this
unsettled market, the technologists that produce CTRM software are being
equally challenged like never before.
DR GARY M.
VASEY &
PATRICK REAMES
Commodity
Technology
Advisory Llc

7 4
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lobal agribusiness organizations today face unprecedented
pressures as shifts in market conditions, new financial
regulations, and consumer trends have created new risk
levels. Mitigating them is critical to maximize profitably,
minimize exposures, increase efficiency and optimize
positions. Commodity trading and risk management
(CTRM) systems are an essential investment in achieving these goals.
TRANSPARENCY ACROSS THE ORGANIZATION
A big challenge for agribusiness is supply and quality of crops. Since 2012,
prices have stabilized or trended lower, with bumper yields providing a
greater supply and lower prices in the grains and oilseeds markets. Current
conditions suggest that stocks will build, which should put downward pressure
on volatility. Stability does not, however, imply a lack of uncertainty and risks
linger among grains, oilseeds and other key commodities.
Rains in the Northern Plains of the U.S. and France are threatening protein
content. Geopolitical risk in the Ukraine could impact crop exports, and the
emergence of toxic fungal residue Vomitoxin is re-emphasizing the need for
tracking of quality and origin.
ACTRMcanhelporganizationsautomateandmanagemanyofthesefluctuating
figures and also track their volumes, quality specs, prices, tariffs, etc., through
the sales contract in a single, integrated system. If materials are lost during
transport, those who need to know are informed immediately and can decide
whether to write-off the loss or escalate. Price changes can be quickly updated,
and all upstream and downstream factors adjust automatically, reducing
manual costs and the potential for human error. While firms cannot control the
volatility of the global landscape, they can track and manage their exposure
in a single solution, providing complete transparency across an organization.
EFFECTIVE HEDGING STRATEGIES
Traditional agribusiness tactics for managing risk include:
■ Buying forward to lock in a future price
■ Trading options
■ Negotiating procurement contracts with embedded optionality to limit the
range of costs
JULIAN EYRE
OpenLink G
AGRIBUSINESS
MARKETPLACE
into
in the
C O N V E R T I N G R I S K
COMPETITIVE ADVANTAGE

7 5
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JULIAN EYRE
OpenLink
New derivatives regulations in the E.U. and the U.S. mandate the use of
central clearinghouses to promote standardization and transparency across
trading activities, resulting in stricter reporting requirements. The cost-
benefit of different strategies, such as whether or not to hedge or execute a
tradethroughaclearinghouseversusadirectcounterparty,requiresenhanced
analytics accounting for margining and collateralization, which can vary
economics of hedging. Firms utilizing spreadsheets are at a disadvantage.
CTRMs enable users to exercise what-if scenarios to analyze the market and
understand the potential impact on P&L. Organizations can hedge strategies
across the supply chain, ultimately maximizing revenues and profitability.
CAPITALIZING ON MARKET POSITIONS AND ARBITRAGE OPPORTUNITIES
As hedging becomes more cash-intensive, treasury and risk management
functions should have a shared, firm-wide view of global cash balances and
cash flows in real time. A CTRM pulls the required data from interfaced third
parties and from the system itself for visibility into an organization’s financial
positions.
Effective hedging in the agribusiness industry requires an integrated view of
risks that encompasses all physical and financial exposures. This includes
the interaction of commodity, currency, rate, liquidity, and credit risks, as
well as the implicit optionality arising from decisions around commodity
type, processing, and logistics.
A CTRM can help put a familiar hedging choice on a more rigorous, analytical
footing. A producer can weigh the relative merits of shorting futures, entering
a swap, or buying a put option. A vertically integrated business can review
its net exposure across production and processing and recognize natural
hedges across the value chain.
A holistic view of market positions can help a firm identify new hedging or
arbitrage opportunities. Historically, the volatile coffee market has been ripe
for arbitrage due to the Arabica-Robusta spread, which has traded at close
to USc100/lb for much of 2014—nearly double the average spread in 2013.
Cocoa has exhibited less volatile pricing with a time-lagged correlation to
the GBP/USD exchange rate due to pound-denominated contracts trading
in London and New York. This presents a cross-hedging opportunity using
commodity and FX hedges in tandem, as well as the possibility of arbitrage
between New York and London cocoa contracts.
Integrated risk management enables real options and what-if scenarios to
be valued. From an economic perspective, the decisions of if and when to
commit to processing various input commodities on a future date should
be contingent on forecast gross processing margins (GPM). A sophisticated
CTRM offers the analytical tools for understanding the likely costs of different
operational processes based on real world constraints such as capacity
limits.
REAL-TIME REPORTING
Agribusiness firms have traditionally put more emphasis on production

7 6
planning. Even with a solid risk management program, transparency is often
fragmented. Treasury, procurement, sales and trading divisions typically use
distinct tools, processes, and technologies, and fail to provide a clear picture
of the business.
An enterprise-grade CTRM streamlines workflows and allows timely data
to be shared across business functions. Dashboard reporting gives senior
management greater visibility into the sources of risk and return, facilitating
more informed decision-making.
When an organization views its value chain through a risk management
lens, it can make better strategic and tactical decisions on total margin
management. Understanding how paying a premium for sustainably sourced
cocoa impacts a margin means solving a multifaceted problem. The firm
must understand the forward cocoa curve, alongside locational and quality
basis risk, as well as freight costs, currency volatility, and credit risk to fully
anticipate hedge-related collateral and margin costs. The organization must
also consider the price elasticity of demand among consumers.
Agribusiness risks are complex and interrelated. A CTRM with integrated
risk management adds value to every aspect of the business, and helps firm
hedge more effectively and adapt to changes in the marketplace. It also allows
organizations to gain more utility out of existing systems and infrastructure
by integrating with third-party software. Adopting a CTRM solution is a vital
step toward total margin management and enhanced transparency around
the financial, physical, and process-related drivers of P&L.
JULIAN EYRE
OpenLink

7 7
BIGDATA
EricFishhaut–Datagenic
PeterRobertshaw–Independent
VanDiamandakis–Corvil
GaryCollier&DennisPilsworth–ManInvestments
RichardChunn–GlobalReachPartners
RalphBaxter–ClusterSeven
ManujSarpal–ETFSecurities(UK)Ltd

7 8
>
OR
OMEONE WISE SAID, “BIG DATA IS LIKE TEENAGE SEX; EVERYONE
talks about it, nobody really knows how to do it, everyone
thinks everyone else is doing it, so everyone claims they are
doing it…” Well, it may not be quite that bad. But for those
in the commodities markets that do follow technology, the
questiontoasknow:DoesBigDatapresentarealopportunity?
McKinsey & Co. stated in a report, “The use of Big Data will become a key basis
of competition and growth. In most industries, established competitors and
new entrants alike, will leverage data-driven strategies to innovate, compete,
and capture value from deep (and) real-time information.” In addition, a
recent study by the Centre for Economics and Business Research (CEBR)
found that better usage of Big Data – through high-performance analytics –
could add up to £216 billion to the UK economy alone, by 2017.
SO WHAT IS BIG DATA?
Most companies generate and collect vast amounts of data that is stored
(perhaps ad-hoc) over time, not always well structured I may add. In most
cases, data is collected with a single purpose in mind; maybe it is for internal
material pricing, and/or asset performance statistics. Perhaps it is for supply
and demand fundamental information and maybe even weather recordings.
All of this data is available for analysis in its own individual silo.
The Nirvana however for any business is to be able to access this information/
data and interrogate it via a single application that can answer any question,
on any aspect (based on past, present or future) and for it to be answered
quickly, efficiently and most importantly accurately, based on true data
analysis.
This tsunami of data/information (generated or accrued) requires a new breed
of intelligence and analytical modelling in order to process, make sense of
and ultimately, enhance business expertise. Big Data can be thought of like
having a total recall memory of enormous amounts of information that has
been gathered over extended periods of time. If the individual can remember
many separate and disparate pieces of data and piece them together to see
one bigger picture, the results could be amazing. But what if that person has
an accident, hits their head and suffers amnesia. All the memories may still
be there, but without the ability to recall them. Hence, without the ability
ERIC FISHHAUT
DataGenic S
BUSINESS
OPPORTUNITY
FAD?
BIG DATA FOR COMMODITY TRADING:

7 9
>
ERIC FISHHAUT
DataGenic
to access and/or extract relevant information, then filter and combine it in
useful ways, Big Data brings little value.
THE QUESTION REMAINS: IS THERE AN OPPORTUNITY HERE THAT CAN PROVIDE
REAL VALUE?
The Big Data approach and strategy means combining many data sets from
various points and applying the correct correlations and filters to yield new
business intelligence insights, and then delivering that to the relevant
person/s in a timely fashion and format. Many business leaders do recognise
the value of Big Data and are eager to utilize it to obtain actionable insights
that improve their business outcomes, but there is still some hesitancy,
perhaps based on costs, resources, time and maybe, simply the unknown.
For many that do initiate efforts, the challenges do become apparent. To
highlight a point, most Big Data scientists (technicians) and analysts seem
to spend on average only 20 percent of their time on actual data analysis,
the other 80% spent… on organizing and managing the data to be analysed.
Therefore, the trepidation to engage in Big Data can be understandable,
because once you push forward with an initiative to aggregate data, you start
to see the chinks in the armour, i.e. the difficulties posed by disparate and
poor quality data. In some cases, this can mean an
abrupt end to the efforts.
Big Data can be a positive disruptive force,
presenting many opportunities for an organisation.
For the commodity trading industry, it has been
highlighted as one of the key opportunities that
can help attain sustainable, strategic advantage.
It’s worth noting that commodity trading involves
the combination of complementary activities of
information gathering and analysis along with
the operational capabilities necessary to respond
efficiently to this information so as to maximise
the value of the commodities. This requires:
■ Focus on the economics of the commodity
markets
■ The relation between market fundamentals and
commodity price dynamics
■ And the implications of this relation and
respective risks
Suffice to say that commodities are subject to many risks, other than just
price and credit risks. These include operational risks, logistic, environmental
and volumetric risks. Risk relates to the future, but every known measure
of risk analysis relies on what happened in the past to enable a better
understanding of future direction. Therefore having the deepest possible
analysis of the past can offer and deliver exponential future advantages.
For the commodities market, like other industries, in order to build a
successful Big Data landscape for your organization, there are three smart
keys:
••
“RISK REL ATES TO THE
FUTURE, BUT EVERY
KNOWN MEASURE OF RISK
ANALYSIS RELIES ON WHAT
HAPPENED IN THE PAST
TO ENABLE A BETTER
UNDERSTANDING OF
FUTURE DIRECTION.”
••

8 0
SMART QUESTIONS: most questions are really just data requests for
information. Most people are comfortable making deductions based on
facts. Smart questions go beyond the comfort zone and seek links between
frameworks that challenge our way of thinking.
SMART INTERFACES: Big Data is an ever-growing mass of information gathered
from a wide variety of sources and likely stored across multiple databases.
Smart interfaces will allow you to formulate different questions that delve
into disparate data sources from a single point of entry.
SMART ANALYTICS: With a smart question and a smart interface to access
the data, you have a start. Now you need the rules by which the data will
be analysed to deliver viable results. Smart analytics are then required that
can differentiate data quality, correct sample sizes, appropriate statistical
analyses and then generate easily consumable answers.
The above will be computationally and data intensive, however the following
simple business goals will drive innovation, as well as competition and
ultimately profits;
■ Analysis of transactional data to highlight areas
of inefficiencies and variability.
■ Reducing or averting business risk.
■ Achieving better decision-making.
Businesses believe technology investment is a strategic way to achieve their
goals. At this stage however, the perceived barriers to investment in Big
Data are relevance and return on investment. Granted, this technology has
really just started to evolve. But it’s prudent to note the movement to Big
Data in the commodity markets is underway, with some prominent players
already investing heavily in this technology. Big Data is promising to drive
innovation, competition and ultimately profits. The revolution has begun.
ERIC FISHHAUT
DataGenic

Every month, The Trading Technologist updates
you with everything you need to know about the
fastest moving industry in the world.
contact Claudine.Eastwood@harringtonstarr.com to
join the mailing list or visit www.harringtonstarr.com
for more information
THWTRADING
TECHNOLOGIST
AMONTHLYMAGAZINEBROUGHT
TOYOU BYHARRINGTON STARR

8 2
>
PEAKING AS SOMEONE WITH A DEEP DISLIKE OF BUZZ WORDS,
this is a tricky subject to address. Big Data: What is it?
Is there anything really new about it? Is it actually big?
What is Data anyway? Why not Large Information? Great
Knowledge? Profound Wisdom? But I digress…
Data is growing. The received wisdom is that data volumes are doubling
every 40 months so data is now being stored at rates that make your eyes
water. Gone are the days of Kilobytes and Megabytes. We are now in Peta
and Exa territory. The data stored daily in 2012 was estimated at 2.5 Exabytes
(2.5×1018). However, computers are better and faster than ever before.
Consequently they can process bigger questions and greater volumes of data
in times that were until fairly recently inconceivable. So naturally people
want (note I avoid the use of the term “need”) to analyse and use all the data
they can get their hands on.
Of course you could argue that people just needed to refine their problem
and constrain the range of data they use. However, that would be missing
the point. Big Data is actually about insights. You can crunch numbers until
the cows come home and it won’t make any difference. What you need really
is to crunch some numbers and get something useful – information – out.
Then you need to do something about it or with it. Therein lies the rub. The
people who love big data love the concept, the challenge, but they aren’t
always the people who can – or even should – do something with it. The
trick seems to be getting people with the need to engage with those with the
knowledge. Not always an easy task since the concept is anathema to most
people dealing with real jobs daily.
PETER
ROBERTSHAW
Independent
S
BIG DATA & BUSINESS
INTELLIGENCE
–
Data and BI is growing in FinTech but concern still remains.
Why is data taking so long to really be embraced in FS?
••
“THE GREAT THING ABOUT BIG DATA IS THE
SIZE – BIZ ARRELY – WHICH ALLOWS THE ANALYSIS TO
DO THINGS THAT OTHERWISE WOULDN’T BE POSSIBLE.”
••

8 3
PETER
ROBERTSHAW
Independent
Business Intelligence has been around for years. Big Data can be considered
just even bigger business intelligence. Maybe it’s just dumbing down the
terms to make them attractive to people who really, deep down, don’t like IT!
The great thing about Big Data is the size – bizarrely – which allows the
analysis to do things that otherwise wouldn’t be possible. If you are running a
supermarket and want to forecast your stock requirements well ahead – such
as for Christmas or Easter – then you can look at last year’s numbers, adjust
for the changes in your sales profile over the intervening period and take a
guess. With real analytics you can segment your customers, track their spend
profiles, integrate the findings and extrapolate using a myriad of different
algorithms until you can predict not just for Christmas, but every other day
of the year. Of course it presupposes your business is responsive enough
and that you can handle the crisis when your stock levels have been brought
down and an unexpected event causes a change in profile. It also assumes
that you have actually created or stored the data. A good example might be
when a well known cookery expert makes a recommendation about a new
product on the TV. The net effect is a sell out across the entire country within
24 hours. However, even this kind of spike in demand can be predicted - up
to a point. And that the main rub. The point is that crunching all the data
in the world only works well when it is aligned to deep business insights and
two learned people allow their thoughts to coincide and spark each other
off. It’s no surprise when you think that through that the invention of the
city – where large numbers of people routinely interact – coincides with the
historic spurts in innovation. However, I digress again.
There’s a saying in the world of TPS/TQ/Lean/6Sigma – if you can measure it,
you can improve it. That is slightly misleading. Everything can be measured.
It just takes a bit of intuition. So on that basis if everything can be reduced
to a number and an algorithm (or better still a group of algorithms) then
all the data you’ve captured can be used to support a forecast or make a
prediction. Every store, every bank, every manufacturer, has a range of clients
with different characteristics, every day has a temperature that varies during
opening hours, there’s rainfall, bad news, shock waves across the world from
political events, the rise of extremism, climate change. The list is endless.
The question is whether it is relevant. If you are selling umbrellas the rainfall
pattern might be important. If you’re selling weapons, the state of world
peace has an impact. If you’re trading futures, lots of things can affect your
predictions, it’s just a matter of finding out what, creating a relationship
between bits of data and then pursuing the changing profiles of transactions
until a pattern emerges.
In short there’s nothing to cause a fright. Just find someone with whom you
can interact and who does know how to create the models and you can make
it fly. The problem is that you really need to trust someone deeply to allow
them unfettered access to that kind of data in the world of finance and as
soon as you constrain the thinking you prevent it from happening. It’s tricky
and it takes time, but the rewards are essentially limitless. Or so I’m told!

8 4
>
OU’VE HEARD THE COMMON ADVICE FOR INSTILLING A DATA-
centric culture: start at the top with executives who are
passionate and visionary about how data can affect their
bottom line; make sure data is accessible and shared freely
within the company; and train employees on data analytics
and foster data-centric thinking. All these overlook the
fact that Financial Services companies already have strong IT departments,
meaning they already have people who work in a data-centric culture and
touch that data every day. It is necessary to teach everyone else the basics of
data and how it is used, but don’t overlook the strong internal resource that
is your own IT department. The IT department should no longer be relegated
to dusty server rooms. Elevating the department will enable all the above
advice to create a data-first company.
■ Increased involvement of the IT department across the business means
that the CTO and CIO are more involved in company strategy and culture. It’s
no secret that the CTO and CIO have long played second and third fiddle to
the CEO, but those days are over. In a truly data-centric culture, the CTO and
CIO have important voices and highly relevant experience. Their data-driven,
technology-centered focus is essential as a company begins to rethink their
internal processes. As the IT department interacts with other departments,
so should the leaders in those departments sync and share strategy and best
practices. Breaking these silos is difficult and needs to be done with utmost
control and security, as sensitive financial data may be involved. But it is
unavoidable for a culture of open data where more eyes and more analytics
lead to more insight.
VAN
DIAMANDAKIS
Corvil
Y
THE ELEVATION
OF THE
IT DEPARTMENT
TOWARDS A CULTURE OF DATA:
••
“THE EVOLUTION TO DATA-FIRST THINKING
DOES NOT HAPPEN OVERNIGHT. IT REQUIRES
CHANGE AT ALL LEVELS. ”
••

8 5
VAN
DIAMANDAKIS
Corvil
■ With the IT department interacting across the business, data flow
increases organically. The old process meant asking the IT department for
some data, doing analysis, and having to request different data for further
analysis, and all without a complete “bird’s-eye view” of what data was
actually available. Ideally, IT working with another department would provide
the tools and training that would allow them to explore and analyze this data
themselves. Which leads us to:
■ The IT department can be an effective training tool all on its own. The idea
of retraining an entire staff from scratch is daunting, and trying to infuse
a passion and respect for the power of data where there was none before
- even more daunting. Empowering the IT department as a more integral
part of the business will allow them to be your first-line zealots of change
towards a culture of data. We must not let the IT department feel that they
are simply wrench-wielding grease monkeys, but rather the integral part of
the company that they are.
Ultimately, the IT department should be stakeholders and wield real
strategic weight at any company making the transition to a stronger, more
nuanced strategy based on enlightening data insight. The evolution to data-
first thinking does not happen overnight. It requires change at all levels.
Compliance will always be first in mind for FS companies, and they must
be ready for the challenges of storing ALL data for regulatory demands. But
you should not ignore one of our greatest tools, and the elevation of the IT

8 6
>
ATA AND BI IS GROWING IN FINTECH BUT CONCERN STILL
REMAINS. WHY IS DATA TAKING SO LONG TO REALLY BE
EMBRACED IN FS?”
Gaining a competitive advantage via innovative use of
information is nothing new in financial services. With no
physical product to manufacture, there’s a natural dove-tailing of Big Data
into this space, and there have been significant advancements in the past
decade in areas such as fraud detection, and insight into both customer
behaviour and the analysis of market behaviour to support placing of trades.
Butforsystematicdecisionmakingsuchasautomatedtrading,whatnewinsights
might Big Data offer? And what are the barriers to building this data analysis
directly into our production processes, so that we might run multi-billion dollar
businesses off that data in a highly automated and efficient manner?
Clearly we need the right tools and analytics to turn Big Data into information
we can action in a timely and efficient manner. By some measures this is now
a solved problem. Tools which can handle the “Three V’s” (Volume, Velocity,
Variety) traditionally ascribed to Big Data have now become mainstream.
In many cases these tools are open-source and available for free. But free
software does not translate to no-cost deployment.
The transformational costs for organisations to put in place new systems
utilising this technology and to integrate existing ones can be significant.
Internal data can be an often overlooked gold mine, but again, installing the
necessary infrastructure and the will to change internal systems to be able to
leverage it in this fashion can still be lacking.
The necessary infrastructure is only part of the challenge. If we wish to
harness Big Data directly in our decision making, then the results of our
analytics need to be specific and accurate as well as efficient and timely.
Small data problems are still present in big data, but often multiplied: even
in the domain of structured financial data, the world can still be a very dirty
place, much more so than many like to admit. Fields such as High Frequency
Trading are clearly well established, but the dominant concern lies not so
much with data variety or volume, but with handling the data velocity with
(relatively) simple repeatable algorithms.
GARY COLLIER
& DENNIS
PILWORTH
Man Investments
D
B U S I N E S S I N T E L L I G E N C E
BIG AND
D A T A

8 7
GARY COLLIER
& DENNIS
PILWORTH
Man Investments
Unstructured data adds yet another level of challenge when it comes to
accurate and specific insights. It’s often argued that Big Data is good for
analysing common patterns and trends and can fall short elsewhere. But even
the former can be error prone: consider, for example, the recent predictions of
Google Flu Trends which caused such a storm several years ago. Establishing
correlation is also very different from establishing causation. The challenge
for industrial scale data extraction to support specific, ideally automated
decision making, whilst guarding against frailties in statistical methods such
as sample bias, is indeed a daunting one.
Ultimately perhaps an aviation analogy is a good one. The complexity,
information gathering and automated decision making ability of a modern
aircraft such as Boeing’s 787 Dreamliner is truly staggering. But we’re still
not at a stage where we let the machine operate automatically without a pilot
at the controls to intervene where necessary. Success, therefore, perhaps
requires us to view Big Data not as some silver bullet, but as another tool
in the hands of skilled people, using appropriately advanced infrastructure
and tools.

8 8
>
HE DIGITAL ERA HAS WELCOMED MANY NEW OPPORTUNITIES FOR
businesses to capitalise on, especially within the financial
services sector. With the exponential advancements in
mobile technology, social media and the cloud, to name
just a few data enriched mediums, potential customers
are now sharing more and more personal information.
Businesses can now use data in leveraging new insights into customers,
products and markets via advanced analytical tools. This explosion of
information has led to the term ‘big data’ which will become key in creating
a competitive advantage, underpinning new waves of growth and innovation.
However, on the surface this may seem an amazing opportunity for Fintech
businesses, it is not yet a reality to maximise their data due to limitations
in skills, budgets, legacy tools, connectivity, quality and availability.
Additionally, regulatory pressure is forcing organisations to improve the
integrity and accuracy of the data. This is just a selection of the reasons
which explain why many financial services businesses have taken so long to
embrace and realise the potential here.
THE EVOLUTION OF DATA
Big data has opened up a world of possibilities for financial services
companies. Previously, traditional business intelligence systems needed a
vast amount of time, resource and cost invested to analyse large data pools.
Technological advancements such as processing power, data warehousing
and the latest analytical software solutions are now allowing organisations
the ability to query large pools of unstructured data, that can be indexed and
made searchable, in a much shorter period of time.
This should lead to meaningful information about target customers, allowing
business’ to devise a strategy based on objective findings, which should
mirror potential client demographics and behaviours thus making them more
reachable with tailored services and products around their wants and needs.
The overall result should lead to insight, opportunity and ultimately growth.
TEETHING PROBLEMS WITH BIG DATA
On the surface, you would be right to question the slow uptake of big data
within the financial services sector however, I believe that there are three
main reasons as to why it has not yet been fully embraced.
RICHARD CHUNN
Global Reach
Partners
T
DATA AND BI IS GROWING IN
FINTECH BUT CONCERN STILL REMAINS.
WHY IS DATA TAKING SO LONG
TO REALLY BE EMBRACED IN
FINANCIAL SERVICES?

8 9
RICHARD CHUNN
Global Reach
Partners
Firstly, the large volume of data available makes it hard for financial
institutions to store and manage. The data can be vast and to turn it into
meaningful insights, can take a lot of time, resources and spend. In addition
to this, many businesses do not yet have access to the latest analytical tools.
Secondly, there is still a negative misconception amongst business leaders,
who question whether they can successfully use this big data and therefore
business leaders do not always see the opportunities available to them.
They can often be unsure as to whether they have the resource and skill to
effectively transform this data into meaningful intelligence and insights.
Lastly, more concerns have developed with regards to the ethical aspect of
data collection, as the public are becoming more aware that their personal
information is collected, stored and used. Is it safe? Is it invading privacy?
These worries still remain and could lead to the implementation of new data
legislation.
CONCLUSION
The financial services industry is still at the beginning of the big data journey
and must embrace the revolution of information available, in order to remain
competitive and offer a more personalised service. Proactive businesses are
now experimenting with customer data gained via mobile, social, blogs, apps
and cookies to name a few. Forward thinking financial services businesses
are now using this data to gain information on customers in order to
help with potential acquisitions, new conversions, consumer behaviour,
competitive advantage and product innovations. In summary, the financial
services industry is now embracing big data and whilst the journey has just
started, there is no doubt that it will change the face of the industry, forcing
businesses that want to thrive to adapt and embrace it.

9 0
>
ONDON’S POSITION AS THE WORLD’S LEADING FINANCIAL CENTRE
PUTS IT ALSO AT THE CENTRE OF BIG DATA.
This focus on all aspects of ‘data’ by a range of stakeholders
– regulators, analysts and investors to clients and the firms
themselves – has been a defining trend of the past decade.
It has been driven by a number of factors, from the financial crisis of 2008 to
the proliferation of new data feeds. The drive for better business intelligence
and data analytics in a highly competitive market has also been a major
catalyst.
The omnipresence of electronic communication has vastly expanded the
volumes of information that financial services companies need to absorb,
analyse and manipulate. Customers and service providers now interact with
financial institutions via an increasingly broad range of channels, including
social media.
From a business development point of view,
analysis of this vast amount of data is about
boiling it down into usable information.
Big Data gives them insight into enormous
data sets: from this, individual analysts
may want to add their own analysis and
add smaller data sets from other sources,
looking to find insights and trends that will
drive the business forward.
What is perhaps less discussed in the
debate about Big Data is where this
information is actually held once it gets
inside organisations. The truth is that much
is distilled into desktop applications such as
Excel and similar databases. The repetition
of the process creates an internal Big Data
problem – millions of spreadsheets stored
across the corporate network. From London
to New York, Mumbai to Shanghai – spreadsheets underpin much of the
modern financial system.
RALPH BAXTER
ClusterSeven L
of
T H E E R A
BIG DATA
••
“FROM A BUSINESS
DEVELOPMENT POINT
OF VIEW, ANALYSIS
OF THIS VAST AMOUNT
OF DATA IS ABOUT
BOILING IT DOWN
INTO USABLE
INFORMATION.”
••

9 1
RALPH BAXTER
ClusterSeven
This fundamental dependence on spreadsheets, however, comes with risks –
significant risks that key financial regulators such as the FCA in the UK, the
Federal Reserve in the US and the Basel Committee on Banking Supervision
in Switzerland, among others, are focusing on. EIOPA, Europe’s insurance
regulator, has stated that it too is focusing on the spreadsheet-based capital
models that underpin Solvency II.
So,thediscussiononBigDataisadiscussionabouthowandwhereinstitutions
hold that data – and the systems in place to control and analyse it.
Research commissioned by ClusterSeven on C-level executives and senior
managers working in financial services in the UK found that, despite a
profound use of spreadsheets, many people still have poor attitudes to
business critical data managed in spreadsheets and similar databases.
Half (51%) of C-level executives said there are either no usage controls at
all or poorly applied manual processes over the use of spreadsheets at the
firms. Only one in 10 (11%) stated there was a fully automated control policy
that allows their business to see a clear audit trail for data.
This is shame: the opportunities to financial institutions from effective data
management and oversight are significant, both from a compliance point of
view as well as from a business advantage perspective.

9 2
>
HE USE OF BI IS NOT COMPLETELY NEW AND COMPLICATED FOR
the finance sector which has dealt with hugely complex
data structures for a long time. But the sector is still lagging
behind in fully utilizing the benefits of the new BI tools and
techniques. The business environment is changing rapidly
and so are the processes. The digital world is growing every
second and hence is the need by business to understand data in a three-
dimensional way.
BI has to be looked at as a Value creation tool at the strategy level and not
in an isolated standalone approach. The focus has to be from top to bottom
to make it work. But as the processes are too complex and the sector is still
dependent on old legacy systems, it is taking time for the finance sector to
utilise BI as an integrated strategic tool. But everyone sees the value in BI
and is eager to adopt it, but still it is implemented at a micro level. Once BI
becomes part of the overall strategic decision making, it can lead as a driver
of growth by allowing more transparency into decision making models for
financial modelling tools. It can be used to analyse the client segmentation
based on the trends and scientific approach. This process can result in
overall innovation and linking it to back complex business models.
There are some technological challenges which are also the bottleneck in
implementation. Banking and financial data is massive so it needs massive
storage capacity. It becomes an issue when huge investment is needed for
new infrastructure, especially when in the last five to six years the sector
is on the path to recovery and there is freeze on budgets. Data quality
MANUJ SARPAL
Etf Securities (Uk) Ltd T
Data and BI is
growing in FinTech
but concern still remains.
WHY IS DATA TAKING SO LONG
TO REALLY BE EMBRACED IN FS?
••
“THE DIGITAL WORLD IS GROWING EVERY SECOND
AND HENCE IS THE NEED BY BUSINESS TO UNDERSTAND
DATA IN A THREE-DIMENSIONAL WAY. ”
••

9 3
MANUJ SARPAL
Etf Securities (Uk) Ltd
and sanity check becomes a key issue in implementation. Data is produced
everywhere and multiplying every second. If we want to go to an era where
critical business decisions are taken by trend and analysis of data, the quality
of the data has to play a major role. There has to be considerable resources
and time to be spent on cleaning and monitoring data quality.
We are dealing with a complex environment where massive systems and
numerous databases are used to store valuable information. Probably most
of them are not very well integrated. To integrate data from these systems
becomes a hugely cumbersome task, which is not an easy job. Last but not
least there are some challenges within the implementation team. According
to Gartner Research’s report Market Share Analysis, the world market for
BI and analytics software is being slowed by a lack of confidence in how to
use it. Lack of skilled people in the industry who have both technological
knowledge and business understanding is also one of the key challenges
which the industry is facing. There has to be alignment of business managers
to overall strategy. They should be made aware of the benefits which this
can bring to them in the day to day running and decision making. This will
help in integration of data and sharing valuable decision making parameters
which are important for each business unit. This hopefully will result in
standardisation of processes in each business unit and aligned with the
overall strategy.

9 4
OUTSOURCING
VSINSOURCING
MickBrant–Teknometry
CosmoWisniewski–CitisoftPlc
AlexOdwell–HarringtonStarr
MalikKhan–XOpenHub

9 5
>
HE FCA’S THEMATIC REVIEW OF OUTSOURCING IN THE ASSET
management industry has created waves among
institutional asset managers and outsourcing firms, but
the ripple effect has also reached the shores of the wider
vendor community including software firms and cloud
infrastructure providers. Utilising any externally hosted
software application is effectively outsourcing. Where this involves key
operational activities, there may be a question mark over whether the system
vendor or the cloud infrastructure firm can provide the requisite reassurance,
writes Mick Brant, Managing Director of Teknometry.
RESPONDING TO TR13/10
In November 2013 the FCA published Report TR13/10, its thematic review of
outsourcing in the asset management industry. The thematic report focuses
on assessing two key areas of risk relating to outsourcing of critical activities
that could result in poor outcomes for customers if not mitigated effectively.
These are:
■ Asset managers having inadequate contingency plans in place to deal with
a failure of their service provider (‘Resilience risk’)
■ Asset managers applying inadequate oversight of their service provider
(‘Oversight risk’)
RESPONSIBILITY LIES WITH THE INSTITUTIONAL ASSET MANAGER
The FCA’s position is clear – responsibility lies with the institutional asset
manager. The expectation is that the institutional asset manager must
maintain some form of capability in-house or have the ability to develop one
quickly in the event of a service provider failure. Are there, however, certain
areas where an institutional asset manager must pay special attention – such
as the resilience and oversight of its cloud infrastructure provider?
While the emphasis of the FCA would naturally appear to be on third party
administrators taking on back or middle-office operations, given the nature
of the asset management industry and its reliance on external technology
providers, the resilience of software application vendors must also come into
the equation and mitigating vendor risk is therefore a wise precaution.
Furthermore, many application vendors are moving to the cloud, as the
MICK BRANT
Teknometry T
CAN SATISFY THE
FCA’S OUTSOURCING
CONCERNS
HOW
while reaping the benefits of
I N S T I T U T I O N A L A S S E T M A N A G E R S
CLOUD-BASED SOFTWARE

9 6
>
MICK BRANT
Teknometry
cost of deploying applications is falling. Similarly the cost of developing
on-demand, resource-sharing applications is falling. Software developers are
now able to deploy applications much more rapidly using third-party cloud
infrastructure providers such as Microsoft, Google and Amazon.
The bottom line is that if an institutional asset manager migrates any of its IT
infrastructure or software applications out onto the cloud, the implications
are similar to outsourcing its middle office to a custodian. In other words, the
institutional asset manager must treat the service provider as an extension
of its business.
RESILIENCE RISK: THE SELECTION PROCESS
Institutional asset managers must therefore make their best endeavours to
ensure that they minimise the risk of their cloud provider and/or software
vendor going out of business. This means selecting a Microsoft, Google or
similar provider in order to ensure that the vendor has enough resources to
provide adequate resilience in case of any element of platform failure.
Cloud is arguably as secure as on-premise and traditional datacentre
solutions but security threats are changing constantly. Ensuring that a cloud
vendor has the relevant security and data protection certifications remains
an important selection consideration.
Institutional asset managers should also remember that applications
engineered for cloud infrastructure that allow on-demand allocation and
sharing of resources across all users may only operate on the target platform
(i.e. an application running on Microsoft Azure may need significant
reengineering to run on Amazon or Google). Furthermore, the sharing of
resources is likely to prevent any one client stepping in and taking over the
application vendor’s account.
MITIGATING VENDOR RISK
While the longevity of an underlying cloud provider such as Microsoft may
not be an issue, one concern is that the application vendor may have a greater
risk of failure. In this way a cloud application may not appear to provide the
business with a reliable failsafe mechanism in such circumstances.
Traditionally, an organisation licensing software to run on-premise would,
regardless of their vendor’s due diligence processes, enter into an agreement
to have the software code and documentation held in escrow, to be released
in the event of the failure of the vendor. The customer may not suffer any
immediate loss of function or service as it would be installed locally and they
would then have the ability to maintain the software using the release code
and documentation. While this may take significant effort, it would at least
provide some insurance.
‘A CLOUD VERSION OF ESCROW’
At Teknometry our on-demand investment analysis application runs on
Microsoft Azure and our clients are City investment firms. Naturally, they
want to ensure that they are able to continue in the event that our business
fails, so we are working with our clients to offer a solution that provides at
least the same level of insurance as the traditional escrow arrangement.

9 7
MICK BRANT
Teknometry
An obvious solution would be to set up an account for each client that they
couldtakeoverintheeventofapredefinedfailureevent,butthiswouldnegate
much of the cost benefit accrued by using a multi-tenanted application. Our
solution is still being refined and it involves creating separate Azure accounts
that are administered by Teknometry, but can be accessed by our clients in
the case of a failure event. Under normal conditions these accounts remain
semi-dormant, therefore they attract only minimal charges.
The cloud infrastructure suppliers provide high availability and resilience,
protecting the applications from loss of data or service by having built-in
hardware redundancy and replicating data to different datacentres, but as yet
they do not provide a solution that protects the end users in the event of the
demise of the application vendor.
OVERSIGHT: GOING BEYOND TRADITIONAL DUE DILIGENCE
If the cloud provider is hosting the institutional asset manager’s own
systems then the emphasis is on resilience and security. If, however, the
cloud provider is hosting a third party application then there is a different
oversight requirement.
This means going beyond the usual due diligence that occurs when an
institutional asset manager is buying a software system to providing a
continual review of a vendor. Once the contract is in place, there are KPIs
that will need to be attained concerning operational performance that have
nothing to do with financial standing – the regular performing of back-ups,
testing the disaster recovery plans, penetration testing and other oversight
routines specific to the application itself.
Many institutional asset managers will carry out or request penetration
testing during the due diligence process, but do they repeat the testing on a
regular basis post-contract?
CONCLUSION
There may be a perception that once an institutional asset manager has
considered the FCA’s thematic review, it might be more reluctant to migrate
to the cloud as this may make the firm more vulnerable or the process
of compliance with the FCA’s guidance more complex. However, while
compliance may require additional checks and balances, I believe that a firm
is no more vulnerable utilising the cloud than on-premise solutions.
For example, a belief persists that institutional asset managers cannot put
client data in the cloud because it is confidential. This simply demonstrates
a lack of education about what the cloud entails. There are certainly data
protection considerations in terms of knowing where a firm’s datacentre is
located and the physical and IT security standards that it is compliant with.
These requirements, however, also apply to on-premise systems.
I believe that the increasing migration to cloud-based applications will
continue among asset management firms. With due care and attention,
investment managers can satisfy the FCA’s outsourcing concerns while
reaping the benefits of cloud-based software.
www.teknometry.com

9 8
>
LMOST ALL RELATIONSHIPS START WITH THE BEST OF INTENTIONS.
Anyrelationshipsuchasthatbetweenanassetmanagerand
an outsource service provider will not have been concluded
swiftly or painlessly from a contractual perspective, even
if the initial introduction between the parties might have
been a bit like speed dating. A massive and concerted
volume of contracts, plans, service level agreements, key performance
indicators, volume assessments and so on will have been produced by a
crack team once the initial attraction was identified.

AFTER THE GLITTER FADES
The secret as always is to keep working at it, ensuring that the relationship
doesn’t become stale or lazy once that crack team has moved on to the
next project. After the initial fears over the lift-out or the transition to a
new system have been dealt with and the problems gradually ironed out,
the real long-term benefit of the relationship to both parties is in ongoing
refinement and improvement to the operating model. This should occur on
a regular or even continual basis, to keep on top of business change and
how this affects the relationship. The longer the relationship works well for
both parties the greater the benefits to all (and the better the payback on the
initial investment made by both parties).

We all know this, however, so what is going on at the FCA (and until recently
inside the Outsourcing Working Group)? Why are they making a fuss about
risks for asset managers who have outsourced operations? And even more
importantly, what can you do about it?

TheFCA,initsthematicreportintooutsourcing(November 2013),highlighted
resilience and oversight issues as being a significant risk to asset managers.
No one is suggesting that both of these and many other factors were not
properly assessed at the time outsourcing deals were struck, but as time
marches on it is imperative to prevent sloppiness or complacency gradually
slipping into the liaison and monitoring roles.
REDRESSING THE BALANCE OF POWER
As an outsourcing agreement goes through its lifecycle, the balance of
power in that relationship shifts. It generally starts off in favour of the asset
manager, in that there is usually a commercial reason for the firm to
COSMO
WISNIEWSKI
Citisoft PLC
A
ASSET MANAGEMENT OUTSOURCING -
KEEPING IT FRESH
FRAGRANT
AND

9 9
COSMO
WISNIEWSKI
Citisoft PLC
outsource a particular process or function. The outsourcer will often give a
discount off its standard rate-card to secure the deal and in the first few years
they sometimes make little money from the arrangement.
As time goes by, high cost service enhancements stemming from changes
to the asset manager’s business will begin to move the pendulum in favour
of the outsourcer and make it harder for the asset manager to migrate away.
The potential loss of key staff and skills can make the asset manager more
vulnerable over time.
Through analysis of resilience risk, oversight risk and exit planning, the asset
manager can help to redress this balance and also improve the relationship
between the outsourcer and asset manager as a whole, restoring trust.
CONCLUSION
Human nature being what it is, asset managers need to review their
outsourcing arrangements on a continual basis. Ideally, a dose of
independence can help in both freshening the relationship and ensuring that
the levels of both resilience (especially in terms of where the business might
be now and where it is going), and oversight (given refinements, volume
changes, changes in geographical emphasis or asset class) are regularly
monitored and assessed.
The key here is transparency: there has to be transparency on both sides of
an outsourcing agreement for it to be successful in the long term.

1 0 0
>
FFSHORE AND OUTSOURCED TECHNOLOGY SERVICE PROVIDERS
have had their chance, so is it time to bring trading
solutions and technology provision closer to home?
The dilemma that faces CTOs across the City, and the
question that they would all love the answer to is this;
“Should we continue to outsource trading technology to providers thousands
of miles away, or should we look to invest in businesses closer to home or
alternatively bring it all in-house?”
It would appear that the mass outsourcing/offshoring model adopted by
a number of the global banks a few years ago has lost its appeal due to
diminishing service levels, questions surrounding quality and the ongoing
costs of licensing agreements and hidden add-ons. The appetite for
being more in control of their technology has reached financial services
organisations due to the increased appetite for disruptive technology and
the ability to create competitive advantages through an all-encompassing
technology offering.
Businesses such as Cinnober have
been profiting from the nearshoring
buzz for the past few years and
their CEO Veronica Augustsson has
done a fantastic job in expanding
their offering from Exchange and
Clearing technology through to
delivering turnkey solutions covering
the marketplace’s full transaction
lifestyle. The R&D dollars that it
takes for businesses to keep up with
the investments that businesses
like Cinnober are making, offers a
compelling argument to nearshore.
In August, UK Trade & Investment
(UKTI) published a report that outlined
the strengths of the FinTech Sector
and the market opportunities
ALEX ODWELL
Harrington Starr O
N E A R - S H O R E ,
UNSURE?
OFFSHORE,
ONSHORE,
••
“THE APPETITE FOR BEING MORE IN
CONTROL OF THEIR TECHNOLOGY HAS
REACHED FINANCIAL SERVICES
ORGANISATIONS DUE TO THE INCREASED
APPETITE FOR DISRUPTIVE TECHNOLOGY
AND THE ABILITY TO CREATE COMPETITIVE
ADVANTAGES THROUGH AN ALL-
ENCOMPASSING TECHNOLOGY OFFERING.”
••

1 0 1
ALEX ODWELL
Harrington Starr
for FinTech companies within the UK. UKTI are actively investing in new
businesses as well as targeting foreign businesses to setup in the UK and
also encouraging ex-pats to return to the UK along with their business ideas.
They believe that the FinTech market in payments, platforms, software and
data analytics is worth £20 billion to the UK annually.
Onshore outsourcing is becoming more viable due to the significant
investment and the facilities which enable these budding technology
entrepreneurs to create bleeding edge software for an industry that has been
‘bleeding slow’ to move with the times. So, has this Fintech revolution came a
little too soon? The computer mouse took 30 years to become a mainstream
tool, but thirty years is actually a typical amount of time for a breakthrough
computing invention to go from the first laboratory prototype to commercial
omnipresence – thank God the millennials are in charge!
However, what if you want to take full control of your technology destiny?
A number of organisations that we talk to are looking at ways of building their
own systems although they continue to be reliant on risk and compliance
providers. The allure for these businesses is to create clean and clear
integration between systems. This is becoming more difficult when using
multiple platforms from different providers as unnecessary silos are created
and regulators are keen to see an improved accessibility to data across
the financial services industry. Building in-house systems comes with its
downfalls, notably the R&D dollars it takes to stay competitive in an industry
that is waking up.
My advice would be this: if you don’t have the skills in-house to do it already,
outsource it, but make sure that that provider is onshore or at least a couple
of hours journey away.

>
1 0 2
UTSOURCING HAS BECOME POPULAR AND COMMON BUSINESS
practice these days but has existed for some time. Since
the mid-1700s, Industrial revolution griped Europe where
there was a high demand for production of goods and
outsourcing became the solution for most problems. In
my view the concept of outsourcing is still developing as
businesses are growing and their needs expand and the level of outsourcing
is becoming more complex. In the technology world, new concepts are being
developed at a rapid pace and the level creativity seems to have no limit.
For a business, developing new technology or even keeping up to date has
become a challenge. This is probably one of the reasons why the outsourcing
is considered valuable and necessary in business to continue growing.

Now there are a number of factors besides keeping in line with just
technology why companies outsource. Cost in my view seems to the biggest
factor, if a business is looking for a product which they like to have as part
of their business, they can simple get it produced where the developer is
a specialist in the field for making this product. Taking online brokers for
example, platform technology which they offer it to their client is key for
their success. They can develop their own platform but it will take some time
to complete and the cost of development will likely to be high. Instead the
broker approaches and online trading platform developer and leases the
technology which will be cost effect and keep them up to with all the new
developments. As well as the cost, businesses rather spend their resources
and focus on core business activities than going out of their way to develop
something which they don’t specialise in. The immediate risk would be cost,
time and time.

When outsourcing the business needs to consider if the service or product
will fits business needs as well as evolves with the business and most
important is the ability to control the product so that the quality and security
is maintained according the culture of the business. Outsourcing can have
a number of advantages such as obtaining the services from the experts in
the field who have spent a lot of time and resources resulting in a very good
quality product. The Time required require to achieve goals is reduced quite
considerably. This unburdens the business and reduces the stress involved
in achieving their goals.

MALIK KHAN
X Open Hub O
S T E P I N T O
T H E U N K N O W N
VALUABLE
ASSET
AND DISCOVER A
Outsourcing:

>
1 0 3
MALIK KHAN
X Open Hub
Look at outsourcing from another point of view, businesses need to consider
very carefully about what can be at risk. Quality risks are always there no
matter how good the outsourced product may be, a business has a culture
and with it, the quality of their product is reflected in all their projects or
products. If something is created outside this environment, the difference
will be apparent very quickly and may alienate their customers. The may
also lose the ability to regular monitoring the progress and at the same time,
lost the right to control certain aspects of its key features. Above all of this
the company value can at a major risks, personnel, in house knowledge and
infrastructure.

If the business simply doesn’t have in house expertise and budget necessary
to implement a project, then outsourcing seems to the best solution. Before
any form of decision, examine the provider’s expertise, negotiations and
monitoring the project implementation are critical. Outsourcing as in any
other business practices should be applied carefully in order to achieve its
advantages and avoid as many disadvantages as possible. Finally, to avoid
any disputes while a business is outsourcing, an exit strategy should be taken
into account and should be part of the agreement which both parties sign.

G LO B A L L E A D E R S I N F I N A NCI A L S E R V I C E S A N D CO M M O D I T I E S T EC H N O LO G Y R EC R U I T M E N T
For more information,
please contact:
Toby Babb at Harrington Starr
T: 0203 587 7007
F: 0207 022 1750
E: toby.babb@harringtonstarr.com
Harrington Starr Company Registration Number: 7246003
Company Headquarters: Capital Tower, 91 Waterloo Road, London, SE1 8RT
Company Telephone Number: 020 3002 2850 Company Email: info@harringtonstarr.com
Company Registered Address: Cornerstone House, 9 Lord Chancellor Walk,
Kingston Upon Thames, Surrey, KT2 7HG.
1 0 4
A B O U T
H A R R I N G T O N
S T A R R
Harrington Starr is a recruitment business based solely around the needs
of the customer. Global specialists in Financial Services and Commodities
Technology recruitment, Harrington Starr offer permanent, retained, interim,
and contract solutions to over 400 of the leading companies in the world and
many thousands of the globes most talented industry professionals. Covering
Investment Banks, Hedge Funds, Prop Trading Houses, Exchanges, MTFs,
Market Makers, Brokerages, Trading Companies, Vendors and Consultancies,
the company is ideally suited to connect world class talent with world class
opportunity.
We strongly believe in authentic networking and being of service. With
this in mind, our offer extends well beyond traditional contingency
recruitment. White papers, commentaries, market information, networking
introductions, consulting, video, content and a series of events all combine
as complimentary services aimed at delivering true partnership in deed as
well as word.
The foundation of the business is, however, excellent delivery with old
fashioned values of manners and respect. We believe in excellence through
understanding – both the sector itself but also the real needs of our clients
and candidates. We love this industry and would be delighted to discuss the
Harrington Starr Mystique and how we can help you in more detail.

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Fintech Capital Magazine #4

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