On December 14, Risk.net published the winners of the Market Technology Awards 2018, including Beacon Platform, Inc., which won in the front office technology category of “Pricing and Analytics: Structured Products/Cross-Asset.” We highlight several excerpts from the accompanying article below.
“A problem we often see on both the buy and sell sides is that although the quants understand the business and are good at solving problems in spreadsheets or Python, they aren’t as good as the IT department at turning these into enterprise production systems,” says Mark Higgins, co-founder of Beacon Platform. Quant ad hoc solutions tend to take on a life of their own, becoming a complex web of system extensions that is a nightmare to maintain, painful to change, and sometimes impossible to even understand. The firm says Beacon avoids this by providing workflow tools for translating code from development to production in a consistent, controlled and maintainable, but flexible, way.
The [Beacon] platform also aims to address one of the most pressing issues currently facing capital markets’ chief technology officers. As one of the awards judges put it: “Banks today are trying to get rid of their specialised pricing and valuation systems, and want services that cover all asset classes.” “Now, instead of asking vendors what specific asset class libraries they have, banks want to know how the vendor is bringing asset classes together, how it gathers data from various sources, so it can be accessed by a centralised set of analytics libraries, how it might use machine learning to analyse the data, and how its analytics libraries can be used on a cloud platform.” Beacon says its flexible development and production platform can be used to supplement a bank’s current infrastructure or to build new cross-asset functionality from scratch. It allows users to plug in multiple analytical libraries, and also provides a set of financial object models. “We have just one right way to represent an interest rate swap, for example. It can be called by the interest rate library – or by the equities desk or anyone else if they want to price an interest rate,” says Higgins.
“Banks are now trying to export as much as they can of their internal technology and analytics to their clients, and are finding it really hard. Their internal systems aren’t configured to do it, and they don’t want to just give unfettered access to their internal environment to clients,” says Higgins. With Beacon’s platform, banks can spin off securely segregated environments that allow clients to access the bank’s analytics and data, as well as incorporate their own data without the bank being able to see it.
Higgins of Beacon highlights another advantage of the cloud – it allows businesses to experiment with computationally demanding problems quickly and cheaply. Take a prototype application that might require 1,000 microprocessors to test: in a traditional setup, the quants request the budget for the computers, wait for them to be delivered and configured, and perhaps six months later get to try their idea. If it does not work, the organisation is stuck with the expensive hardware. With a cloud-based platform, the quants request 1,000 cores, and have them available within minutes. “The quants can run their experiment, and only pay for the computing time they use. They get to do it quickly. And if it works, they can scale it up for production. And if it doesn’t, they just turn it off,” says Higgins.
Having spent significant time and resources producing [data], many institutions are wondering if there might be further value hidden in their information warehouses – and if so, how to find it. Vendors are reaching for tools such as data mining, visualisation and, increasingly, machine learning. Beacon [is] among the award winners that are incorporating machine-learning techniques and tools into their applications.
The full article can be found here: https://www.risk.net/awards/5374691/market-technology-awards-2018-new-problems-new-solutions .