From MoneyBeat:
For some large investors, the trading game has shifted from speed to size.
A focus on size, specifically using “big data” to get a trading advantage, has become a major component of research budgets at hedge funds, asset managers and even some large banks over the last year. The spending push is a shift from just a few years ago, when firms’ research and development budgets were focused on making sure they were first in line on every trade.See also:
As the spending shifts, a new industry is emerging to serve these deep-pocketed investors and their high-tech trading systems. Established technology giants like and Oracle as well as emerging niche players are pitching new products and services that promise the latest trading keys on everything from regional home prices to social media.
“There are limits to raw speed and they have reached that limit,” said Sinan Baskan, vice president for capital markets at SAP AG. “But the diversity and volume of data enables you to discover something new.”
In one example of the unique way firms are looking to take advantage of big data – impossibly large pieces of information that can now be analyzed by increasingly sophisticated computers — Connecticut hedge fund has its eyes set on FedEx Corp. In an effort to gauge FedEx employees’ confidence in the growth of their company, the fund has compiled a decade’s worth of information on a slew of eclectic items from the delivery company. These include the rates of charitable and political giving by FedEx employees, the percentage of its employees with private-schooled children, home prices in the company’s hometown of Memphis, and the social media usage of FedEx truck drivers. In charting that information against the company’s stock and options price, along with its quarterly earnings, the fund is seeking to get an unique, potentially forward-looking read on the company’s performance.
“Making meaningful decisions out of big data in real time is where [sophisticated investment firms] are focused today,” said Mr. Baskan.
Hedge funds have largely driven the latest push, but asset managers and large banks have also become steady clients, said Alfred Eskandar, chief executive of technology firm Portware LLC. The focus for these firms is on company and country evaluations, as well as the cost of trading....MORE
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