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Friday, November 14, 2008

FX: A CEP Success Story

Posted by Richard Bentley

One of the questions that sometimes comes up in our meetings with prospective clients is "Why should I buy your whizz-bang CEP platform to do <insert use case here> and then build on top of it when I can go get a shrink-wrap app that does most what I want straight off?". Of course, this is a very easy question to answer: "If you can get an app that does what you want now, and you're confident it will meet your requirements as they evolve going forward, play nice with your existing systems, and the price is right, then why are you wasting time talking to us?". Marc Adler said as much recently with his comments on Risk Management systems, which were right on the money.

Of course, this answer is really an open incitement to the audience to start a discussion about what they really need - now and in the future - and often (more often than not in my experience) it is soon apparent that there is no app out there which will do all, or even most, of what they need - and extending a shrink wrap app to do that is often more work and pain, if it's possible at all, than building it themselves.

So here the salesperson will introduce the core value proposition of an open CEP platform; the ability to support existing and future requirements, to meet the underpinning performance requirements, the necessary resilience, to provide the connectivity, and - vitally - the tooling to allow the same vendor-supported and maintained technology to be applied to the client's constantly evolving needs, with rapid time-to-market. In short, the salesperson emphasizes the benefits of a more "strategic", platform-based approach to solving the client's short and longer-term requirements and - if the salesperson has done his homework and read his audience right - that one-size-fits-all shrink wrap approach is often consigned to the trash.

The nice thing about this approach is that there's no sleight of hand here; every word of the pitch is true.

Let's look at the use of Apama within Foreign Exchange (FX). We've blogged previously about how Apama is being used extensively for real-time FX rate Aggregation and algorithmic execution; just last week our latest client to go live - Standard Chartered - talked publically about their deployment of Apama for their FX spot dealing. We've built a Solution Accelerator to offer relevant but customizable connectivity, algorithms, monitoring and dealing GUIs out of the box. We've even won awards (ok, enough already!). However, although we're (clearly) not shy about trumpeting the power of our offering in this area, the more telling aspect of our deployments - and the aspect of relevance for this article - is not what clients do with our Aggregator; it's what they do *next*.

I was visiting one of our large Tier 1 banking clients in New York a couple of weeks back. They've been using Apama for FX Aggregation for nearly a year now. I walked through the door on to the trading floor and first thing I saw was 3 screens with - unfamiliar - Apama Dashboards on them. "That looks nice" said I (somewhat gormlessly). "Yes, it's our new auto-hedger - it uses the aggregated book feed from your Solution Accelerator and lays off our risk positions over your ECN connections according to a new algo we've built". All developed and running in Apama, extending our Solution Accelerator with new algos and screens - and all unbeknown to me!

I was somewhat more in the loop concerning the work of our friends at one of the world's largest Banks, who have been using Apama for FX Aggregation for well over a year, connecting to multiple liquidity pools to improve their execution. That bank has have recently launched a new FX pricing engine - built with Apama - connecting to their Apama FX Aggregator for real-time pricing, running analytics to derive per-client spreads for market making (similar to how I describe [here]). An auto-hedger is in the works - again extending the initial FX Aggregation deployment and based on the Apama CEP platform. And at least 3 other FX clients have either rolled out or are in the process of rolling out market making solutions as extensions of Apama FX Aggregation deployments (and those are the ones I actually know about!).

Moving beyond auto-hedging and market making, we have a growing number of examples of the benefits of a more strategic "platform" approach, such as Apama clients like ING in Europe taking FX feeds into their Equities Algo systems (also built on Apama) for cross-border spreads (locking in an FX rate as the third leg of the trade), prop shops engaged in currency forward / spot arbitrage, and clients like Louis Capital FX extending their Apama-based FX agency hedging their FX options trading. (As an aside, one the hottest topics for us right now in FX is the area of real-time Forward FX price streaming to large corporates - once the province of the very biggest banks - utilizing real-time volatility and depth of book analytics ...)

The power of the more strategic approach enabled by CEP platforms like Apama, armed with the out-of-the-box connectivity, performance, resilience and tooling, to meet client's current and future needs, is nowhere more ably demonstrated by our experiences in FX.


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options trading software

I agree with some of the things you said. But it was interesting reading your opinions about some subjects, although your obviously not objective :).

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