When it comes to sheer IT “bling,” financial services is never outshone. High margins, deep pockets, and intense competition in investment, banking, and insurance have pushed these companies to the edge of just about any technology there is. Storage, grid technology, Web services, virtualization, VoIP -- you name it, financial services companies have bought it.
But firms in the financial services sector are driven by more than profit and time to market. Stringent regulations and governance requirements in the securities and banking sectors have raised compliance to the top of the stack.
The result is a two-edged sword: millisecond performance and rapid development to compete in a cutthroat market, while zealous regulators hover in search of mistakes.
Pushing IT to the limit
Financial services companies of all stripes pour money into performance. Today, with high-speed grid and clustering architectures, not to mention utility-based computing services from IBM, Sun, and others, money spent on HPC (high-performance computing) goes further than ever before.
At prime brokerage firm Merlin Securities, high-performance grid computing was a way to create new services that distinguished the startup from a crowded market of firms that serve more than 8,000 hedge funds. Amid deep-pocketed competitors such as Morgan Stanley, Merrill Lynch, and Bear Stearns, not to mention a sea of smaller firms, Merlin constructed a powerful, grid-based trading and reporting platform using dual-processor Dell PowerEdge 2850 servers, Oracle’s 10g database, and BEA WebLogic middleware, says Amr Mohammed, CTO of Merlin.
Whereas prime brokerages court hedge funds with a wide range of services, from low-cost trading to sophisticated financing options, Merlin saw a common need across the hedge fund market: demand for smarter, faster, and more customizable technology. Built from the ground up, Merlin’s HPC grid allows the company to process transaction data throughout the day and spin off reports about that data in real time, rather than batch processing reports overnight, Mohammed says.
Using Web-based tools developed by Merlin on top of standard portfolio management tools and other investment software packages, customers can dive deep into their data, slicing and dicing performance relative to industry benchmarks, or sorting it by stock analyst, sector, or position. That’s allowed hedge funds not just to single out the performance of individual portfolio managers from a sea of trades but to track the value of an individual decision over time, says John Quartararo, managing director at Merlin.
With some hedge funds managing 5,000 to 12,000 stock positions, that’s a lot of data to crunch. But Merlin’s systems, including rackable Oracle databases, have had 100 percent uptime since they went live in January 2004, Mohammed says. Nonetheless, he admits, getting the Oracle database -- not to mention portfolio software and other applications -- up and running on 64-bit Dell servers in a clustered environment required considerable tweaking.