Silicon Graphics Inc has brought its high end graphics to the high-flying world of finance with the launch of the Silicon Exchange, and the New York Stock Exchange will be among the first takers. Silicon Exchange is a joint initiative that brings Silicon Graphics together with providers of risk management and visual finance software, to offer interactive three-dimensional offerings to financial institutions. It has been developed, the company said, to assist financial institutions in handling complex multi-dimensional calculation tasks associated with portfolio management and global risk analysis. Silicon Graphics parked its road show bus outside the New York Stock Exchange and invited the chairman on board to see visual finance in action. He was obviously s uitably impressed because the task is now under way to ‘visualise’ some of the back-room fund management functions. Where a manager currently has to monitor some 11 diferent screens at one time, and could miss a danger signal appearing on one while looking at another, he will now have all data consolidated onto a maximum of two screens. Silicon Graphics said that although all major financial institutions rely heavily on computer systems, most still have 1980s green screens, displaying rows and rows of figures. A financial analyst attempting to assess the risk of a portfolio might have to deal with data on numerous screens or be presented with a 64-page report to plough through. The company said the financial market was becoming ever more competitive, and traders already used to high technology were voracious for a competitive edge.
Mathematical modelling
It therefore believed that the time was right to introduce three-dimensional visual tools that were capable of integrating multiple pages of data, and providing immediate, easy to understand representations of risk and exposure. Dr Andrew Lo, Professor of Finance and director of the laboratory of financial engineering at the Massachusetts Institute of Technology said financial markets only increase in complexity over time, and while our mathematical modelling abilities have kept pace with this trend, we have just begun to tap the considerable power of visualisation for financial applications. He said that only now have we got the computing power necessary for the next revolution in financial technology of which he believed visualisation would be a central feature. There are already in excess of 100 companies which have developed visual finance applications to run on the complete range of Silicon Graphics’s hardware, from the entry level, $5,000 Indy workstation to its high-end Power Challenge supercomputing servers. One application now shipping is a tool kit from Toronto-based Visible Decisions Inc called Discovery. The tool kit enables visualisation of a complete portfolio of bonds for example, each with different maturity dates, over a period of up to 50 years, showing the value of a bond at any point in time, as determined by a given yield curve. The user can interactively alter the yield curve percentages at various points in time, and see a representation of which bonds will lose money and which gain. The model will cater for up to 3,500 permutations on one screen. The three-dimensional representation can be viewed from below, to see the negative bonds, or above to see the positive ones. The user can then ‘brush’ the spike to bring down detailed information about the particular bond, and make instant decisions to lay off funds where necessary. Logica Plc will provide the customer interface for this product, customising it to the individual company and integrating it with the user’s existing financial systems. Another more gimmicky-looking application is London-based Fusion Systems Ltd’s Parable, which transposes a financial portfolio into a strange three dimensional shape. The spikier the shape, the more risky the portfolio. Based on a customer’s own criteria for ‘stress’ factors which would increase or decrease the risk of the portfolio, the shape will spin on its axis and begin to wob
ble as any of the elements go critical. But behind the more frivolous front end is likely to be some complex mathematical algorithms from Toronto-based Algorithmics Inc’s RiskWatch software. Silicon Graphics said that it would be marketing the product to financial institutions and would evaluate each company’s requirement to decide the best hardware and third party software for each application and then bring in the appropriate software suppliers and work closely with them to deliver the best offering to the customer although it has yet to sign up any UK financial institutions.
