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Banking on BarCamp June 13, 2008

Posted by James Webster in : finance , add a comment

Back in 2006 I attended the inaugural BarCamp Sydney. It was a great day and they have recently host their 3rd event. BarCampBank is a spin-off of the popular ‘un-conference’ series aiming to ‘foster innovations and the creation of new business models in the world of banking and finance’. The first such event is being organized for London this coming 5th of July (via O’Reilly Radar). Should be worth checking out, I’ll definitely aim to be there.

A fishy derivative contract

Posted by James Webster in : finance , add a comment

Prior to starting my new job (structured commodity derivatives IT), I was working with a team building a risk platform for an exotic equity derivatives desk. One of the most common OTC contracts the front-office would sell is known as an asian basket. Asian means that the strike price is not set at a predetermined absolute level (as is the case with American or European option styles) but rather taken as the average price of the underlying asset over a stated period of time before the option’s expiry. A basket option is a derivative contract that covers multiple underlying assets.

Now that I am in commodities I have been researching the field to understand it better. A broader range of commodities are traded on exchanges than I realized; in addition to the currently topical oil contracts traded on the NYMEX & ICE exchanges (and others), the agricultural contracts of the Chicago Board of Trade, and the base and precious metals contracts traded on many other global exchanges, there are exchanges in the Far East listing futures contracts over cocoons and raw silk.

Fish Pool is a recently established Norwegian exchange which provides a marketplace for trading forward contracts on fresh salmon. If they add contracts for other fish (tuna perhaps?) I wonder if a canny investment bank or hedge fund will come along and start offering the market ‘Asian seafood basket’ options :-)

Well… I thought it was amusing.

Continuing the recent market data theme… it appears the NYSE has decided to follow the path set by BATS and NASDAQ; NYSE to sell market data to Internet sites:

The New York Stock Exchange (Nyse) is gearing up to launch a low-cost real-time market data service for delivery over personal finance Web sites.

It would be great to see some cheap, public APIs from BATS, NASDAQ or NYSE to enable the construction of a simple Silverlight ticker with the new duplex service capabilities of Beta 2.

Market data opens up June 3, 2008

Posted by James Webster in : finance , add a comment

Australia isn’t the only place where an incumbent exchange is feeling the heat from upstart competitors.

In the US, Nasdaq OMX has launched a ‘free-of-charge real-time market data service’ (via Matt). This will be distributed by Google Finance plus other news sources.

Meanwhile the small-but-growing ECN BATS Trading (which will soon be competing against European bourses) last week announced that it will be distributing
real-time market data via Yahoo! Finance.

Nothing from the NYSE so far. Both of these moves are targeted at retail investors, the hefty annual fees that institutional buy-side and sell-side players pay to exchanges, ECNs and data providers like Thomson Reuters and Bloomberg are not going away any time soon. The data is also fairly basic, just the last price at which a trade took place so no free access to the Level 2 data that is essential to read a trend in market movements.

What would be interesting however is if both BATS and Nasdaq open up some form of API or streaming/ticking market data access to retail investors… both Google and Yahoo are big fans of web services so I would say it is almost certain they will integrate this into their existing APIs. Xignite, a smaller player in financial web services and data, are also part of the NASDAQ Last Sale launch. I would be surprised if these services offered anything other than synchronous pull style requests… a streaming, asynchronous push (via Comet perhaps?) mechanism would be very cool.

A few other links surrounding market data and open-ness: