State Street veteran Joseph C. Antonellis currently manages an IT organization consisting of 3,100 technologists with a budget that represents between 20 to 25 percent of the firm’s operating expenses. On top of that, he is responsible for supporting approximately 600 business applications.
Under Antonellis’ leadership, State Street is building upon its online and on demand information delivery architecture. State Street’s latest release of mystatestreet.com online client platform uses leading-edge technology to give customers a more flexible and intuitive way to use the information provided to them.

Antonelis has championed the construction of a new 24x7 state-of-the-art data processing facility built in rural Massachusetts to mitigate risk and improve the firm’s processing capacity. The new facility is one of only six fully configured 2N data centers in the world today and provides the necessary resources to maintain the firm’s level of service to its customers, according to company claims.

To fully optimize all of State Street’s resources, Antonellis encourages all of his staff to get involved and share ideas. He hosts a quarterly Q&A session with the IT staff to discuss informally current and future projects. He has implemented an employee recognition program, dubbed Excellence in Action, that acknowledges the work of 20 select IT employees with significant monetary awards semi-annually.

Overseeing 216 technologists in more than 130 facilities, UBS Investment Bank’s Philip Freeborn is beginning to see the fruition of multiple year-long projects within the sell-side firm. First is the development of the firm’s automatic Quote Engine II, which is based on a Java-enabled grid computing architecture. Second is the firm’s Securities Settlement Engine, which pools the broker-dealer’s cross-border securities settlement engine off the legacy mainframe environment into a Linux computing environment. Finally, Freeborn’s organization integrated Application Networks’ JRisk product with the in-house trade capture platform and is in the midst of migrating the bank’s credit portfolio on to the new platform.

Looking into 2006, Freeborn and his team plan to have their hands full with Project Hudson, which will bring together the US clearance and settlement processes for the former PaineWebber business unit and the bank’s current processes. Freeborn expects the project to go live in mid-2006 and clients should see UBS as a single broker-dealer within 12 months.

Kurt D. Woetzel is a 20-year veteran of The Bank of New York (BNY) where he supervises a staff of approximately 4,000 technologists in 32 countries around the world, which is roughly one sixth of the bank’s overall headcount. As CIO, Woetzel has managed more than $2.5 billion of technology and application investments over the past three years, including customer relationship management (CRM) and enterprise resource planning (ERP) platforms across the bank’s institutional products areas in more than 30 countries.

Under Woetzel’s watch, the bank created an institutional Web portal connecting more than 14 of the bank’s business, developed and implemented an enterprise image and workflow architecture and received CMM Level II and Level III certification sooner than the industry in best practices.

Three major technology milestones reached under Woetzel’s tenure has been the deployment of the Inform platform (a Web-based transactional service platform that provides reporting product for custody customers), an automated collateral management system for broker/dealers and BNY SmartSource (an investment-operations outsourcing platform).

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As managing director and head of global execution trading for HSBC, Kevin Bourne has masterminded the development of an infrastructure for global cross-asset trading to support its global e-trading operations.

Bourne is overseeing the implementation of a global FIX engine, which currently includes discussions over regional considerations and multiple product participation. A major lynchpin of the project is the global implementation of one trading platform—Fidessa from based Royalblue—for all cash, DMA, algorithmic and program trading flow.

Bourne has also kept a focus on regional operations as his team revamped its New York trading floor. As of October, the next phase of Bourne’s global infrastructure rollout will see Fidessa installed in New York, which will include the adaptation of the incumbent Nyfix OMS for derivatives to ensure compatibility.

Bourne himself has attracted some high-profile technologists as he undertakes his global projects. They include James Leman, former president of the Brass operating unit of SunGard Trading Systems; Daniel Doscas, former head of global fixed-income connectivity for Lehman Brothers; and e-trading veteran Kevin Houstoun, formerly at Citigroup as an executive vice president of equity electronic trading and external connectivity for Salomon Smith Barney's London office.

Bourne is at the center of a high-profile team and IT project that will direct HSBC’s investment banking operations for years into the future, and his influence will be seen long after the project is over.

Ajit Naidu has been chief technology officer for the Global Investment Banking and Institutional Technology division of Merrill Lynch since 2004. He has pushed the boundaries of the bank’s IT and this can be seen in his projects for the coming year. He is undertaking three major initiatives that will transform the bank’s IT operations: building up the firm’s low latency infrastructure, moving towards a service-oriented architecture (SOA), and leveraging grid computing.

He is also focusing on more low-level issues, such as the possibility of remote access solutions for desktops for accessibility and security.

Naidu’s understanding of how background systems can affect front-office critical functions has led him to see that a global low-latency infrastructure is a central element for successful algorithmic trading. His focus on grid computing, as well as vendor consultations, have concerned solutions for handling and storing large volumes of market data—not only key for traders’ and algorithms’ effectiveness, but increasingly important for compliance in the face of regulations such as Reg NMS and MiFID.

Naidu aims to use grid computing for compute-intensive applications within Merrill, which could range from algorithmic trading to real-time risk management systems. Under his stewardship, grid is already being successfully used in the processing of models for market and credit risk. His understanding of the opportunities and position of grid computing within a bank’s IT architecture bode well for Merrill’s wholesale adoption of the technology.

Supervising a team of 160 technologists, Janus Capital Group CTO Andrea Young’s organization is keeping multiple balls in the air as she focuses on delivering a new management reporting solution, re-designs the firm’s Janus.com Web site as well as streamlining its investment operations process and systems.

Work on the new management reporting solution, which represents 40 percent of the 2005 IT budget, began earlier this year and is expected to be completed by the end of the calendar year. The project’s goal is to develop more accurate financial metrics and reporting to measure the firm’s progress against internal and external goals.

The affected systems include the firm’s SAP Business Warehouse, Stategic Enterprise Mangement Access Data Sales Vision and Callidus TrueComp.

Young’s own success metrics include bringing projects in on time, on budget, and within its defined scope as well as meeting the client’s satisfaction and seeing a reasonable return-on-investment.

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As part of its application to the SEC to become a consolidated supervised entity (CSE) in response to EU regulations, Bear Stearns developed a series of new solutions.

Under the final CSE Rules, a broker-dealer that maintains $1 billion of tentative net capital and $500,000,000 of net capital may apply for an exemption that would permit it to use an alternative, risk-based method for calculating deductions from net capital for market and derivatives-related credit risk.

To address these risk issues, Bear Stearns set up cross-organizational teams to track the progress, deliverables and expense, and understand the consequences of the rules as interpreted by the Business team. This meant developing new software models to support the business rule changes; establishing new databases to support the new reporting requirements; developing new system interfaces and updating the business continuity plans, risk and change management constraints.

Each team developed their solutions and vetted them before the CSE Steering Committee for approval. More than 30 coordinated technology solutions were successfully applied in a six-month period to satisfy the comprehensive requirements.

The IT teams were made up of more than 40 IT staff members who came from seven different development groups that supported Operations, Credit and Market Risk, Derivatives, Global Clearing Services and Corporate and Administrative Systems and hailed from Bear Stearns offices in London, Dublin and various locations in New York.

HSBC is moving toward a global FIX protocol engine that will serve as a key link to the firm’s plans for a cross-asset class trading infrastructure. The firm hopes to implement a global FIX engine that will work with multiple products within the firm during the first half of next year. HSBC has pulled together IT staffers from fixed income, derivatives, foreign exchange, equities and operations to plan how the FIX engine will work and what it will deliver. Adds one officials, "we can then say to customers, 'Here's our front door. You can come in this way and we can move the order to the product area that you're trying to execute it through."

The global FIX engine will not be built internally and the bank is in the middle of the RFP process with selected vendors. Deployment is likely to begin by the end of the first quarter of 2006 and should continue until the end of June 2006.

Wachovia Securities provides repo services to its clients, and while there was a clear business case for introducing more services in this space, a systems overhaul was required.

The systems overhaul consisted of implementing the Anvil Repo and Securities Finance Trading System (ARTS), a front- and middle- office system for international repo and securities finance. The project began in September 2004, and WSI was trading using the new system by the end of the year. Some upgrades of peripheral systems were also required for compatibility with ARTS.

The system coordinates all of WSI’s collateralized borrowing and lending activity. All the key functions of WSI’s operation are now linked via ARTS, with all the necessary information channeled through the system that can be used by any departments involved in a transaction. This has streamlined risk management, compliance and legal documentation within WSI, as well as increased transparency.
Before the system overhaul, WSI concentrated exclusively on US Treasury repo as it was not able to centrally risk manage a broader and more complex trading book. Since the project, WSI has expanded its offering to provide collateralized financing with a range of global debt instruments including emerging market repo and global credit repo.

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To provide investment professionals flexible access to information, Bear Stearns developed Customer Electronic Access (CEA), which provides customers with the ability to access data on a wide range of Bear Stearns services from a single point of entry.

The data accessed through CEA, which the firm calls an “Information Vending machine,” is standardized across all Bear Stearns divisions and offers customers a consolidated view of all account activities conducted within the Firm. Hedge Funds, Prime Broker clients and larger funds can create their own customized views of data to feed their systems across all business areas. It supports multiple asset classes including Equities, Futures, Foreign Exchange, Global Clearing Fixed Income and Stock Loan information.

CEA is being used internally to solve dozens of requests per day and by over 30 external customers. That number is expected to grow to the hundreds as more asset types are made available.

Bear Stearns officials say the firm’s goal is “one client, one firm, one view.”

Over the past 18 months, JPMorgan’s Investment Bank has undertaken a major restructuring of the technology processes, tools, and platforms that support the largest Credit Derivatives trading platform on Wall Street.

The team was challenged to address exponential growth in trading volumes, improve resiliency by reducing failure recovery times, and reduce hardware costs. The Credit Derivatives Infrastructure Refresh (CDIR) program was developed to go beyond traditional server consolidation approaches and create a comprehensive “virtual infrastructure” service.

The CDIR program has delivered additional compute power to Credit Derivative traders and significantly reduced the time needed to recover from a hardware failure down to minutes while adding capacity on demand -- without rewriting existing applications. Through leading-edge technology, the Investment Bank is able to re-allocate low-priority compute capacity -- such as UAT (User Acceptance Testing) servers or idle servers -- to high-priority production uses within minutes. In addition, the team developed and integrated a number of techniques to industrialize both planning and operating activities.

The result is greater resiliency, higher capacity, and lower operating costs to the business. For example, the infrastructure compute cost of a Credit Derivatives transaction has been reduced by a third.

The results are, as the CDIR program motto states, cheaper, faster, and better. The CDIR team earned internal JPMorgan accolades as a JPMorgan Chase Technology & Operations Role Model program for “Executing to Make a Difference, ” with its delivery of a more resilient platform Credit Markets.

Fund Connect is State Street’s electronic execution system for global mutual funds offered by State Street Global Markets through Global Link. Fund Connect is a single, global solution that allows investors a global solution that provides one application a set of tools for pre-trade, trade and post trade actions. Fund Connect focuses on execution, expenses and the evolving regulatory environment.

Fund Connect is an online direct marketplace which connects investors and fund providers in real time. It consolidates reporting, multi-find blotters, and connectivity to custodians with the features of direct systems, namely: retention of relationships, real-time trading, and direct pricing into one system. According to company claims, the back-end integration provides seamless connectivity to transfer agent systems and custodians for STP.

Fund Connect allows the sales staff of the funds to retain and strengthen their relationships with their clients. Beyond the connectivity to transfer agents and custodians, Fund Connect also provides customized reporting for portfolio managers and salespeople.

To address regulatory controls, the solution addresses market timing and unauthorized trading issues.

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In a project currently spans a number of years, Bear Stearns is in the midst of consolidating its various derivatives trading platforms on to a single global system.

The bank’s vision with this project is of a derivatives operation that was streamlined from front to back using Calypso Systems’ integrated solution.

When completed, the new platform, dubbed Calypso, will trade interest rate, credit and equity derivatives, foreign exchange (FX) and money markets, FX options, commodities, bonds, repos and securities lending and collateral management, among other instruments.

Calypso provides front-to-back trading and trade processing software systems. The application used to consolidate derivatives trading will allow Bear Stearns to add proprietary models to it.

As part of Swift’s migration to the new Internet Protocol-based SwiftNet FIN, Citigroup consolidated approximately 20 Swift interfaces into one of three regional Swift interfaces and saved approximately $250,000 annually for each retired interface. The bank also created a consistent and cost-effective internal Swift utility that would provide a channel for connectivity and delivery of services across all of Citigroup’s business lines to its correspondent community. This included the sell side, the buy side and the various market entities, such as exchanges, central banks and clearing houses.

The bank decided to attack the Swift migration with an overlapping three-phase strategy. First, the bank tackled the mandatory migration to the new IP-based network. Second, it deployed Swift connections to the various elements of market infrastructure. Third, Citigroup rolled out available SwiftNet messaging services, such as FileAct, InterAct and Browse.

With the initial rollout of FileAct, which is used to exchange batches of structured financial messages and large reports, Citigroup expected that customers would use the service’s messages to communicate with a single Citigroup business. It turned out not to be the case, as customers asked for the ability to send the bank mixed files using FileAct. Citigroup now sends and receives mixed or segregated files depending on customer requirements.

Using Swift’s FileAct simulator tool, Citigroup expects to see a potential 30 percent cost savings among its top 23 highest message-volume customers through the use of moderate compression and the reduced number of files transferred.

Although it’s in the planning stages and is expected to be executed before June 2006, HSBC will deploy a global FIX engine to serve as a key link for the bank’s cross-asset class trading infrastructure.

The bank decided to release a RFP for the FIX engine rather than rely on its extensive FIX solution that resides in-house in order to save time on the development of the engine. Since the interface will act as the front door for customers connecting to HSBC, the bank pulled together staffers from fixed income, derivatives, foreign exchange, equities and operations organizations to help select the appropriate vendor.

The bank plans to use FIX wherever it can with exchange and market connectivity to simplify things, including processes in the post-execution space and matching software.

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American Century Investments (ACI) reduced trading transaction costs and improved its trading room’s effectiveness by implementing the FIX Protocol throughout its Equity Trading System, which went live in 1989. Since that time, the former single mainframe, US-only system has been replaced by client server applications that allows for the global trading of equities, currencies, and derivatives on a 7 by 24 basis.

In 1997, ACI became the first investment manager to use FIX allocations. In 2000, ACI became the first investment manager to use FIX for currency trading. ACI uses FIX for all pre-trade, trade, and post-trade communication with brokers.

The trading room has improved markedly. During the period of 1995 to 2004, orders from portfolio members rose from 53,069 to 346,388, or an increase of 553 percent. At the same time, the number of equities trades rose only from 11 to 14, or an increase of 27 percent. Moreover, the length of trading hours increased during the same period from 17 hours to 24 hours a day. A recent benchmark of the portfolio entry system showed that 36 orders can be created in less than one second and that 473 orders can be created in less than 16 seconds.

This project had a direct effect on the commission rates paid by ACI, which are below industry norms. According to independent consultant Abel-Noser, ACI transaction costs in 2003 were 75 percent below the median for comparable firms with a savings on trades of nearly $540 million for the year.

As a second tier investment firm, Dresdner Kleinwort Wasserstein (DrKW) has a reputation of deploying new technology before its larger investment rivals. While the majority of investment firms that have deployed voice over internet protocol (VoIP) have kept it in the back office and nearly any place besides the trading floor, DrKW has not been so cautious. The investment firm has deployed VoIP on its trading floors and is actively using the technology for its demanding traders.

One DrKW technology manager says the firm does not tolerate any delays or degradations in voice communications and so far it has adopted the technology with little compliant. If a trader notices that he or she is using a VoIP system, then we’ve all failed, the technologist told Waters.

VoIP has given DrKW’s traders access to more functionality and flexibility without any true realization that they are using the system.

In order to improve business continuity planning after 9/11 and the SARS outbreak of 2003, global corporate and investment bank Scotia Capital decided to provide its trading teams the ability to continue to operate even if the traders needed to be dispersed geographically.

The bank rolled out BT’s ITS Campus configuration with 250 turrets connected to a node in Toronto and an additional 100 turrets connected to a second node at its remote BCP center some 20 miles away from the main office. The new system is unique in its use of Dense Wave Division Multiplexing (DWDM) technology to connect the two sites in real-time, and provides cost effective distributed operations. DWDM uses big band optical fibers capable of transferring all of an organization’s communications including data, storage and IP.

The bank also installed ITS Anywhere for Web, for use by traders who are working from home or any other remote location with internet access at the same time it rolled out the new turrets and upgraded its BCP facilities. The new platform reduces downtime caused by travel problems or other incidents -- further extending the bank’s BCP capabilities.

Over the past year, the bank has built BCP through a distributed virtual system. Being one element of the virtual system means the remote node is used day-in, day-out and there is only one set of configuration data. The team at Scotia can operate as one, even though they may be geographically dispersed as part of a business continuity plan.

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The RIO system from Bear Stearns provides a single framework which delivers a consolidated view of the firm’s risk across all portfolios. It provides a daily view to the co-President of BS and the heads of trading and risk management to drilldown into hot spots of risk emanating from either specific portfolios or categories of risk.

The RIO framework allows each trading desk to plug into a consistent centralized risk engine. By establishing a standard set of risk definitions to which each desk’s data converges, RTUO has enabled the firm to tie together and accurately attribute VaR and stress statistics to factors which reoccur though the firm.

The consolidated framework satisfies the market risk requirements of the Basel II accord, a necessary element in Bear Stearns’ application for consolidated supervised entity status with the SEC. RIO provides Bear Stearns senior management with a tool for understanding the firms’ exposures to market forces.

The BlackRock Fund of Funds team implemented a risk analytics engine at the beginning of this year. The engine is based on the research of Bernard Lee, the director of risk management for BlackRock Fund of Funds.

Key to the new engine is its ability to cover the short comings of the Sharpe Ratio and other standard performance evaluation metrics that were developed for equities portfolios, but are being used now for hedge funds and other alternative assets. The Alternative Sharpe Ratio has the “look and feel” of the Sharpe Ratio and the more general and sophisticated properties of the Omega function, which is the centerpiece of a technology solution for portfolio evaluation, optimization, and performance assessment being used by BlackRock for portfolio risk budgeting.

Their technology gives rise to an alternative performance ratio that is robust to the departures from normality that reduce the usefulness of the Sharpe Ratio, while being in the familiar form of the Sharpe Ratio. Their technology is applicable in portfolio optimization/asset allocation, where each individual candidate fund’s Alternative Sharpe Ratio, measured by its contribution to the portfolio’s risk, is equal to the portfolio’s Alternative Sharpe.

While the approach is computationally complex, the team has implemented a practical technology solution that maintains a high level of precision. In their empirical work they are able to show various salutary results of using their technology. For example, they are able to illustrate with hedge fund index data that their method can yield better cumulative returns and be more sensitive to exposure to drawdowns accompanying extreme market events, such as the Liquidity Crisis of 1998.

Working with Algorithmics, State Street has advanced its my.statestreet.com information delivery platform by integrating a comprehensive and flexible set of risk management tools, which uses Algorithmics’ Algo Risk solution. The Risk Reporting Service delivers extensive capabilities in an intuitive, easily accessed and customizable package, and has been developed and proven through a pilot program with State Street clients.

Using consistent client data for risk measurement and reporting functions, the service provides customer access to risk analytics; multiple methodologies for calculating Value-at-Risk, including Parametric, Monte Carlo and Historical Absolute risk measures and relative risk against a benchmark; comprehensive instrument coverage across a wide variety of fixed income instruments (equities, swaps and options); and access to advanced risk decomposition tools. The platform also provide ‘what-if’ capabilities as well as stress testing capabilities on a large number of treasury curves, inter-bank curves, industry spreads and credit rating spreads.

Clients may choose any level of detail, from drill-down to the security level to multilevel re-aggregation. This risk reporting function allows my.statestreet.com users to manage more effectively by making business and investment decisions based on advanced yet simply accessed risk analysis derived from consistent data.

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HSBC’s trading technology infrastructure is embodied in an asset-class agnostic, core reference architecture labeled internally as Project Fierce, which stands for Finance Instrument Enterprise Resources for Consolidation and Execution.

The architecture governs what systems can be built and how internal and third-party technologies interact with one another. The standardized infrastructure is leading to less incompatibility and more accountability within HSBC’s IT framework, leading to more effective and comprehensive mitigation of operational risk.

HSBC officials claim that Fierce is a discipline and not a project because there is no end date. Once HSBC has taken its application architecture globally and put it into the Fierce environment, the bank will have achieved a real-time, cross-asset class transactional and risk platform. Beyond that point, there will be underlying development work that will be done within the Fierce framework that lets all work be done on a consistent basis. The adherence to Fierce also breaks down inter-product politics completely, as it leads to 100 percent dependence upon each other's platforms.

The first iterations of the Fierce infrastructure have already been deployed at the firm’s Paris, London and New York offices. The bank’s recent purchase of Smart Trade Technologies' order and routing platform and its global adoption of Royalblue’s trading system Fidessa both conform to the Fierce discipline, and will be central to a streamlined and unified global infrastructure.

LCH.Clearnet, the clearing house in London for the London Stock Exchange, had its disaster recovery plan tested in July when terrorists struck the London Underground system.

It passed with flying colors. LCH.Clearnet is based in Aldgate House, next to Aldgate Underground station, one of the four points of terrorist attack on which the emergency services focused their efforts. An official from the firm estimated that around 100 of its staff were in the building at the time of the blast.

The firm managed to move quickly to its backup facility, where it stayed from the Thursday of the bombings until it returned to Aldgate House the following Tuesday. Its service was uninterrupted, and it was so comfortable in operating from its backup facility that it launched clearing for a major new service at the LSE on the Monday after the attack, before returning to its normal home.

The plan adapted well to the circumstances, and showed clear mitigation of risk for a facility that is crucial to London’s financial markets, and by extension the global markets. The lessons learned on the day have led to it further developing its DR plans, taking into account communication and transport difficulties encountered at the time. Its plan can be looked up to as a tried and tested example for other firms when it comes to mitigating the risk of terrorist attack.

In an effort to store, retrieve and examine all e-mails and instant messages sent and received inside the walls of Lehman Brothers, the investment firm implemented Orchestria e-mail archiving solution. So far, the results have been impressive. According to a Wall Street Journal article published earlier this year, Lehman Brothers discovered a suspicious and actionable e-mail from one of its traders.

“Orchestria captured that violation the day it occurred and the guy was out the door the next day,” recalls a compliance officer for the investment firm. “The fact that out of 1.5 million messages we caught that one, that sends a very powerful message to the organization. Those kids in the surveillance room were pretty excited to see themselves mentioned in The Wall Street Journal and they went out for a drink that night.”

One reason for the successful use of email archiving can be attributed to Leman Brother’s relatively small size as an investment firm. The compliance officer says that because the firm “we’re somewhat smaller we’re able to move a little more quickly in the technology.”

The Lehman Brothers representative adds that the firm has an “effective, inter-disciplinary process that involves technology, information security, legal and compliance, and in a number of important subject matter areas and records management we meet routinely, and we have developed a common language.”

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