Gresham’s CTO: “Our engine borrows from many aspects of CEP”

by  Steven Hatzakis, http://www.financemagnates.com

A leading provider of regulatory compliance technology solutions, Gresham Computing Plc, listed in the UK under ticker GHT.L, speaks with Finance Magnates during an exclusive interview with the company’s Chief Technology Officer Neil Vernon, and Global Business Development Director Bill Blythe.

The company has offices in New York, London, Sydney, and Singapore, and a nearly £65 million market capitalisation based on its current stock price of 102.50 GPX per share on the London Stock Exchange (LSE). It reported earnings earlier this month showing 16% increases Year-over-Year to £14.8 million with recurring revenues up 20% to £7.8 million.

During the call, Mr. Blythe explained the company’s approach in terms of sales efforts and commercial structure, recent customer acquisitions, and together with Gresham’s CTO Neil Vernon elaborated on the existing challenges within the current regulatory landscape globally. ……..

There is still a lot of legacy infrastructure across institutions that when combined create further fragmentation of the trade life cycle. One analogy used was how a FedEx package shipped for $10 across the Atlantic could be tracked every step of the way, while a transatlantic financial markets trade for even $100 million could have less granular detail with regard to where it is in the trade process as financial institutions still have fragmented systems and external relationships.

This also reflects fragmentation in the underlying markets, such as US Equity markets, so the analogy made sense.  Another example given was how they could ask a large dealer about its exposure to a specific company, such as Blackrock, within a segment of the dealers business, and while they could report on that, there’s normally no mechanism to report exposure across all divisions and holdings to a specific underlying security or fund, as there can be overlap and fragmentation within firms due to the sheer number of routes and clearing relationships and technology channels, among other issues that can add to the complexity of accurate net reporting.   ……….

With regard to regulatory compliance, some of the real-time screening Gresham does while processing trading activity includes scanning for fraudulent trades such as those that are committed by rogue traders who often go to great lengths to hide such activity until it’s too late.  …..

Complex event processing

Around the time of the interview, I had noticed that Mr. Vermon’s prior roles included work with Complex Event Processing (CEP), which is basically combining qualitative (event) data into an existing algorithmic (quantitive) approach or vice versa. Essentially, a trading strategy that could also take into account news, and how such “events” would together affect the strategy or require it to adjust its course of action.

After asking about any relationship between the firms heuristic engine and CEP,  Mr. Vernon said: “Our engine borrows from many aspects of CEP (Complex Event Processing). It receives events in real-time and is able to aggregate events and group events together. It is also able to filter out irrelevant events. Business rules can run over single, aggregated and grouped events and determinations made about whether there is a data integrity issue. Issues found by the engine are then managed through workflow and integration with upstream and downstream systems in a similar way to how CEP engines typically couple with BPM (Business Process Management) tools.  This process occurs at bank grade speed – 500,000 trades processed per second.” ……..     Read the full interview.