StreamScapeTechnologies - Welcome to Streamscape Technologies

Last week I attended the Futures Industry Association (FIA 2011) trade show in Chicago. Along with our partners in crime Numerix, Sybase and the folks from Panopticon we spent two days chatting about Risk Analytics, Complex Event Processing, Derivatives, micro-breweries, Wall Street protesters and sushi. Time well spent.

After several visitors to our booth expressed an interest in real-time derivative pricing, someone brought up the credit crunch issue and how much of it may have been based on improper derivative pricing. Collateralized Debt Obligations (CDO) and their faulty valuations have certainly been at the forefront of the debate, prompting the New York Times to print a scathing coverage of the issue, appropriately titled "How Wall Street Lied to its Computers". That got my wheels spinning. When it comes to complex, cross-asset derivative pricing (ie. CDO, Swaps or Milti-Legged Options) only a hand-full of large financial institutions can afford to invest in a large in-house quant team that can provide the proper pricing services. And in many cases the organizations that price such securities are also the market makers for those securities.

Since the rest of the financial industry relies on those prices (set by the market makers) to be accurate in order to properly valuate risk and opportunuty, it begs the question.  Does owning the pricing services constitute a price monopoly?  We beleive it does.  The problem here is that pricing and valuation models are considered intellectual property, the so called 'secret sauce' of a financial institution and are therefore not subject to anti-trust laws the same way other monopolies are.  As such, the bigger question is whether an Open Derivative Pricing platform can solve the problem? Is Pricing as a Service a possible way to harness the wisdom of crowds and assist in self-regulation of the derivatives market?  Can crowd sourcing result in more accurate risk models (based on a price equilibrium) and resolve the price monopoly stale mate?

Many in the financial industry today espouse the so called Wisdom of Crowds principle, whereby collaborative decision making is deemed more accurate and fruitful then standard quantitative analytics. With the advent of globalization financial systems have grown large and complex.  Recent turbulence in financial markets underscores the importance of looking at financial systems as a single, inter-dependent entity with cooperative control rather than a series of inter-connected islands of information and activities.

One of the driving forces behind efficient and stable financial markets is proper information sharing; another is the need for cooperative strategies that allow complex financial transactions to be mutually beneficial, leading to a type of fiscal equilibrium wherein profits are maximized in proportion to managed risk.  In fact, a number of modern economists have taken lessons learned in Game Theory and applied them to financial markets by invoking the so-called Nash Equilibrium rule.

In broad terms, the Nash Equilibrium states that if several (for example financial) institutions are making decisions at the same time, and if the outcome depends on the decisions of others, we cannot predict the results of the choices of multiple decision makers if we analyze those decisions in isolation.

The corollary to the Nash rule (and the basis for so called coopetition) is that a savvy decision maker must do what is right for both the individual and the group (as spoken by Russel Crowe in his brilliant portrayal of Nash in the movie A Beautiful Mind). Had I not seen The Gladiator the night before, my expectations of an equilibrium may have been a tad more appropriate.  As such I was waiting for Nash to dispatch Ed Harris with a cry of "Are you not entertained?" and then take on the Dean of Princeton with his imaginary host forming a single column by the chess tables. 

Welcome to the StreamScape Blogosphere, or BlogScape as we would like to call it. Readers are sure to be excited about yet another technology blog (yawn). And it is a fair assessment that those in love with the sound of our own voice (or key strokes) are likely to appreciate these posts more then others. As the subject of this self-ridicule, I can promise that we will keep this blog live and entertaining, balanced with technical information and opinions of the contributors. No need to take our selves too seriously. "I find that just surviving is a noble cause".

Although a technology veteran of nearly 25 years, I would not consider my self an expert in any given domain.  With technology in a constant state of flux, we are always in the process of learning new things while forgetting certain old ones. Rather it is more appropriate to put one self into a category of the Technically Curious, and on occasion into that other category of the Curiously Technical individual. The difference being that the former would cause an audience to comment "It's good that you know that" while the latter often results in the classic inquiry "Why do you know that?".  Our definition of an Expert: someone who has decided it's time to stop learning.

Why the Bowler Hats?

In addition to having an 'eclectic' sense of humor, our team is comprised of a broad range of individuals with an appreciation for science, the arts, science fiction and South Park.  So if you paid for a drama, please stay for the comedy as well.   The bowler hat wearing mascot has been used by a variety of software vendors in the past. Although admittedly many marketing departments do not understand the significance of this iconic symbol, other then the classic 'every man' moniker assigned to it by artsy types in search of Merlot and Brie.

The image is a tribute to the Belgian surrealist Rene Magritte, whose works challenged observer's preconditioned perceptions of reality. Although much has been said about Magritte's ability to capture relativity and human perception in art, a lesser known fact is that some of his works, specifically Golcondè and Time Transfixed have been used by scientists to conceptually depict Einstein's theory of relativity.

More specifically, it is the concept of a View Relative to the Observer that has captured the imagination of budding physicists.  And it is rumored that no less a man than Richard Feynman and even Einstein him self have both used imagery and props from the paintings to illustrate their theories.

Recently the convergence of Einstein and Magritte has led to a new synthesis in thinking that has practical applications to data processing, information distribution and collaborative system design. One result of such synergies is an important observation that knowledge and actions lead to ever larger fragmentation in societies and computing systems alike.

While some of this may be on the esoteric fringe for us, the imagery is a constant reminder of proper distributed system design and general collaborative computing principles. Certainly management of large, distributed systems must honor multiple user perspectives, providing a system view relative to the observer, with the ability to take snap-shots of data transfixed in time as it flows thru a system.  And with this comes the realization that complexity of modern data processing systems is overlapping that of statistics, probability, particle physics and other sciences. In short, it's a complex world out there and many view points have to be considered. Important people need fancy hats; and one man's bug is another man's feature.