The Brute Force Approach

Wall Street executes financial operations every single day. However, most of those tasks do not generate revenue yet they still incur cost. That’s a problem; obviously, especially when you consider that these tasks are done more than once. I know, I know that's a definite understatement. The point is that cost keeps increasing.

A few years ago banks started looking for ways to solve this problem. The answer they came up with was “grid computing”. In fact they invested 120 million dollars in it just last year. They needed more power and they got it. Makes sense right? Wachovia and JP Morgan have been investing in this technology since 2001, even the Chicago Stock Exchange got in on the act as early as 2002 when they purchased Oracle 9i RAC. Celent and Hersh predicted that investment in “grid technology” would increase to 500 million by 2010. Banks were able to decrease cost by leveraging their relatively inexpensive hardware. Problem solved right? Wrong. (For more info see: < http://www.wallstreetandtech.com/showArticle.jhtml;jsessionid=Q0U5FSIPLYWAMQSNDLOSKHSCJUNN2JVN?articleID=187203197 >)

That was 2006. This year Wall Street’s computational needs have increased and so has its cost. Consider this: Each Intel chip requires roughly 75 watts of power, multiply that by the thousands needed for the operations they perform and that’s a lot of money…way more if you throw in cooling costs. So what new answers have they come up with? One of those answers is “multicores”. Basically Intel and AMD have just increased the number of processors they give these banks. Intel has even developed an 80 core-chip, which they claim uses less energy than a household appliance. However, whether it will actually hit the market is still not certain. Accelerators are also popular and they too come in the form of chips. But whether they are GPU’s or FGPA’s they are still aimed at achieving the same goal...increasing your computational power. But that just seems like throwing money down the drain- it's hopeless! (For more info: < http://www.wallstreetandtech.com/showArticle.jhtml;jsessionid=BRQCSHECZUQO4QSNDLPCKH0CJUNN2JVN?articleID=198001925 >)

I’m exaggerating, but I do think that there have got to be better ways to approach this problem. I think Merrill Lynch has a good idea. They’ve already outsourced some of these processes (See above link). So has Wachovia. Well, not completely. They’ve actually developed a system to allocate system capacity based on how “mission-critical” a process is using IBM software. (For more info: < http://www.wallstreetandtech.com/showArticle.jhtml;jsessionid=3T0VLFLYHOBJUQSNDLRSKH0CJUNN2JVN?articleID=198001931 >) Why keep beating around the bush? I know, it’s not like these banks are designing an information system, but the costs are still significant. Rather than invest in processors, or blade racks, let someone else do it. SOA…or even SaaS, I’m just throwing things out there. But of course there is no perfect solution. As my friend Benson was kind enough to enlighten me, there are still problems that can arise with resorting to web-services; take DoS for example. That could be an issue when dealing with sensitive financial data. But does that mean that businesses are slaves to high performance computing and its insatiable lust for power?

Pump and Dump Version 2.0

I recently read on article about this vast underworld in cyberspace. It turns out that information systems containing the worlds data …and precious financial data are not the only things becoming more advanced, but so are the methods of hacking into them. It’s a world that’s as devious as the more sinister underbelly of society that has become infamous thanks to Hollywood. Ransom schemes, credit card information; which by the way is sold for as low as one dollar a piece, “fencing” items over chat rooms…it’s all happening right under our noses. Not to mention the so called credit card dumps acting like a techie version of the weapons trade. These networks are highly mobile, moving around about every six months. And the funny thing is that these guys are using things like Pay Pal to close out their transactions.

But of particular interest at least to this forum is not the viruses or “malware” being created and sold as if it were a commodity, and it’s not to focus solely on the technological aspect, but rather the way in which this is changing finance. Take young, bright criminals, and add a whole array of high tech tools and your get a new way to commit crimes. Remember the old “pump and dump” scam; think you know what it’s about…well think again.

Hackers are breaking directly into online brokerage accounts and liquidating entire portfolios…after they have made a bundle of course. After buying a ton of shares using compromised funds on E-trade or Ameritrade they manage to artificially raise the stock price and then sell of their shares to the surprise of other investors who in turn experience a sharp drop in the price. What looks legitimate is actually a scam so be careful. The question is how you stop it. You can’t. At least not right away. Last year E-trade reported an 18 million dollar loss in its third quarter due to similar scams. It’s not like you can stop everyone from trading. How then do you stop the fraudulent accounts being created every day? Or do you just learn to live with it as Marc Gaffan, director of marketing for the RSA points out? I know the secret service is on the job, but what are the result that we can expect?If you want to learn more try and take a look at the whole article < http://www.informationweek.com/story/showArticle.jhtml?articleID=197004939>.