I am proud to share that, after completing the course work and passing the exams, I am honored to join the distinguished and diverse group of NACD Certified Directors, committed to advancing the highest standards of boardroom excellence.
#NACD
I am proud to share that, after completing the course work and passing the exams, I am honored to join the distinguished and diverse group of NACD Certified Directors, committed to advancing the highest standards of boardroom excellence.
#NACD
Brennan Carley was quoted in this recent article by Max Bowie at Waters Magazine, on how the Credit Suisse acquisition by UBS will affect their systems and data spend: https://www.waterstechnology.com/data-management/7950801/big-bank-mergers-big-cuts-in-data-spend-not-so-fast-experts-say
Brennan Carley spoke to Waters magazine recently on the people impact of the acquisition of Credit Suisee by UBS:
For Waters 2022 wrap up, Brennan Carley was interviewed on his thoughts regarding the Microsoft / LSEG deal: https://www.waterstechnology.com/emerging-technologies/7950447/waters-wrap-big-tech-exchanges-and-a-rapidly-evolving-market
Brennan Carley was recently interviewed by Anthony Malakian from Waters
Following the acquisition of Refinitiv by the London Stock Exchange Group, I will be leaving Refinitiv where I have spent the last ten years. For most of that time I ran the Enterprise Data Solutions business, and two years ago I took on a new challenge and created an entirely new function: the Consulting & Implementation Team which works with Refinitiv’s most strategic customers. I have had many great experiences at Refinitiv, and worked with some amazing people, and now it is time for a new chapter.
Beginning in 2022 I will once again be providing advisory services through Proton Advisors.
Check out Stephanie Hammer’s book, “Architects of Electronic Trading: Technology Leaders Who Are Shaping Today’s Financial Markets.” I had the opportunity to contribute a chapter (Chapter 14, on FIX.)
In October of 1851, Julius Reuter used carrier pigeons between Brussels and Aachen, closing the gap in telegraph lines that connected Berlin and Paris. This gave his customers a latency advantage, enabling traders in Paris to learn of news from Germany ahead of their competitors.
Since then, and especially in the last few years, many millions have been spent, and we are now measuring trading delays in microseconds instead of hours. Much has been written on the topic of reducing latency in trading systems, which begs the question: When it comes to trading, how fast is fast enough, and where will it end?
A recent survey concluded that:
So why the difference, and is it as simple as “need to be the fastest” or “fast is good but it doesn’t need to be the best”?
Let’s analyze this.
So how fast is fast enough? Very simply, to capture the maximum value of the trade, you need to be as fast as the fastest of the other traders who have comparable strategies, i.e. strategies that trade off the same or correlated signals.
What if you are not as fast as the fastest of your competitors? As long as the alpha has not decayed completely, there will be opportunities for slower traders to pick up some of the remaining alpha. Which begs the question, how quickly does alpha decay?
The answer to that question depends on two things:
So how fast is fast enough? It depends on your strategy. You need to be as fast as the fastest competitors who are trading “equivalent” strategies (i.e. strategies that are based on the same signals or on signals with strong correlation). If you are not the fastest, you may still be able to capture some value. In general, the more your strategy depends on clear and unambiguous trading signals, the more rapidly alpha will decay and therefore the more important it is to be at the very front of the pack.
As the fastest traders continue to invest in infrastructure to reduce latency, the rest of the players need to either step up to the new higher bar, or trade different strategies, typically those where the correlations are less obvious or weaker. Even within those strategies however, a competitor with an equivalent strategy and faster infrastructure will always gain a greater share of the profits. 150 years ago that advantage was measured in hours. Now it is measured in microseconds, and firms at the leading edge are measuring in nanoseconds. As long as someone is able to squeeze some more latency out of their system, the race will continue.
Caveat: These comments relate exclusively to the ability to capture alpha from trading. Investors who are looking to enter or exit a position (either long or short) trade with the objective of reducing market impact, which is a quite separate discussion.
On Thursday, October 20, I will be speaking at the Financial Information Forum Market Data Capacity Working Group. I started the working group in 1997, so it will be fun to go back after all these years!
I am excited to announce that I will be teaching this fall at my alma mater, New York University. I will be teaching a class in Management Strategy in Technology Sectors:
“This course provides an overview of the process of implementing a successful management strategy in an information-, technology- and knowledge-intensive environment. Fundamental topics include the development of strategic vision, objectives and plans; implementation of strategy and the evaluation of performance; industry and competitive analysis; SWOT analysis and competitive advantage and sustained advantage. Advanced concepts include strategic positioning in global markets, Internet strategy, strategy in diversified firms, and interactions between organizational structure and strategy and between ethics and strategy.”