Saturday, February 24, 2007

Algo customization for India

The Asia-Pacific region and India might be considered to be coming up on the algorithmic rails, with more than three quarters of orders currently routed via FIX in Asia. But the decentralised nature of markets in Asia will mean that it will be harder for brokers and vendors to develop differentiated technologies in each market. India, with its multiple connectivity challenged exchanges, will lag the trailblazers

While customised algorithms specifically for the Asian markets work as well as anywhere else around the world, it is difficult to simply import algorithms from other parts of the globe and expect them to work across Asia. They do need calibration to market conditions.

In terms of algorithmic providers in the region, Credit Suisse accounts for a 63 per cent market share according to TABB Group, followed by Goldman Sachs (13 per cent).

Richard Balarkas, managing director, head of Advanced Execution Services Sales at Credit Suisse, says that with each specific market in Asia the algorithms have to be carefully calibrated. He says: “Some of the Asian markets can be trickier than many other markets. There are a lot of idiosyncrasies out there in terms of tick rules, trading hours and the way they handle orders.

“That is another way in which algorithms can help. If you are selling from somewhere in Europe, then trying to trade [equities in] Asia can be extremely complicated and difficult to understand.”

While Algo trades are sweeping the stock markets, there are also some lurking dangers of its widespread use.

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Friday, February 16, 2007

Big Four, Three, Two, One....?

If you have ever examined any M&A deal document, you could hardly ever miss the statement “ the New Co shall appoint one of the Big Four as auditors”. Such has been their credibility that shareholders felt at ease if one of them certified the Annual Financial statements – at least until the unraveling of Enron saga of 2001.
When you go back in history, originally we had the Big 8 ( 1970-89 ), a few of them merged to become the Big 6 ( 1989-96), which repeated the act to become the Big 5 ( 1998-2002 ) and with the 2001 Arthur Andersen collapse, became Big 4 as they are now. The countdown it seems is making a steady progress.

Recently five Silicon Valley executives -- including four with ties to Cisco Systems -- are suing Ernst & Young, claiming the Big 4 accounting firm peddled them a tax shelter that left them owing millions of dollars in taxes, penalties and damages.

The lawsuit harks back to the late 1990s, when national accounting firms joined with elite law firms and international financial giants to market tax shelters to wealthy investors so they could avoid taxes. Silicon Valley was a prime hunting ground because it was teeming with executives eager to find ways to slash their tax bills after cashing in stock options during the tech boom.

The explosion of tax shelters triggered congressional investigations into the practices, plus crackdowns by the Internal Revenue Service and the California Franchise Tax Board.

In 2004, the state offered an unusual tax-amnesty program targeting participants in what authorities called ``abusive'' tax shelters. The state originally hoped the amnesty would snare $90 million, but instead it collected a national record $1.4 billion from 1,202 taxpayers. Nearly $1 billion of that came from 860 individuals.

The five plaintiffs' saga began when Ernst & Young pitched them with a complex tax shelter known as a ``contingent deferred swap,'' or CDS. In 1999 and 2000, they were among about 125 people nationwide who paid Ernst & Young nearly $28 million in fees -- an average of $224,000 -- to participate in the program, according to the lawsuit.

What do you think ? Could there be a repeat of Enron & Worldcom ? How long do you give before we say Big three, two, one…

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Thursday, February 01, 2007

Oh honey, you’re so hot - just let the ticker run !

The majority of men and women credit their private wealth with achieving a better sex life. When viewed separately, a larger percentage of women agree with the statement, perhaps indicating that females derive a greater degree of empowerment from their financial independence than their male counterparts.

"Money as an Aphrodisiac — Being Rich Means Getting Lucky on Your Own Terms," survey by Hannah Shaw Grove and Russ Alan Prince, two well-known researchers on the habits of the rich and famous, found. In the survey, three-quarters of men cited more frequent sex and a greater variety of partners as the primary benefits of having wealth, revealing a fascination with quantity.

Grove and Prince surveyed people with an average net worth of $89 million, and who make more than $9 million per year. They found that money is an enabler in a number of ways to enhance sexual experiences.

On those lines, Google’s shareholders should have looked forward to a great night in bed, when the Mountain View company declared it’s 4th quarter profits that nearly tripled.

“Not yet” – the Market seemed to say as it mercilessly drove the stock down by $ 9 to $ 494 on Wednesday. In a measure of the extraordinarily high expectations investors have for Google, the Internet giant reported that quarterly profit soared above $1 billion for the first time -- though it was nearly impossible to find anything worrisome in Google's numbers, disappointed investors sold the stock off anyway. (Oh, I suppose company's growth is clearly slowing; it was ONLY 70 percent year over year. Talk about letdowns ...).

Google’s earnings per share jumped from $1.22 in the same period a year ago to $3.29 as profit rose 177 percent to $1.03 billion.

Excluding tax gains and stock-option expenses, Google earned $3.18 a share -- more than the $2.92 analysts had figured based on past growth, keyword pricing, industry trends and other data.

Revenue was up 67 percent to $3.2 billion, also higher than the $2.19 billion that analyst polled by Thomson Financial said they were expecting.

But it turned out that investors -- used to almost 10 quarters of jaw-dropping performance -- were actually hoping for a more Google-`size' surprise and `experience'.
Bad night indeed. And no breakfast in bed.

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