Architects of Electronic Trading: Technology Leaders Who Are Shaping Today's Financial Markets [Book Excerpt]


William Murphy is the chief technology officer at Blackstone, leading the Blackstone innovations and infrastructure team. He is responsible for the firm’s technology efforts. Prior to joining Blackstone in 2011, Bill was founding chief technology officer for Capital IQ. There, he was responsible for overseeing all product design, development, infrastructure, and technology support, and was involved with all operations of the business.

Before Capital IQ, Bill led teams at Sapient, delivering solutions for large clients primarily in financial services. He received a BSE in computer science from the University of Pennsylvania.

How are new technologies helping to increase transparency for investors?

Technology alone cannot enhance transparency. Our users and the business must embrace it in order to provide our investors with the information they require. We feel this is an area for innovation in the industry and want to lead the way.

At Blackstone we provide our investors with data and secure documents through our investor portal. The portal allows them to drill into their investments and the underlying portfolio assets that make up the funds.

Leaving technology aside, behavioral changes are helping generate increased transparency in alternative asset classes. In part, the push can be linked to high-visibility scandals in the broader financial markets that have prompted regulators to increase scrutiny. Even in the absence of regulatory reform, for the most part, firms generally are beginning to recognize the value in being more open.

However, people’s increasing acceptance of technology in general may be a greater reason why markets are embracing greater levels of transparency. Simply, people are more accustomed to transparency in other areas of their lives and they recognize the benefits. Alternatives should keep pace.

How are advances in technology improving risk management generally?

Increases in processing power and data availability are helping companies to better, and more rapidly, assess risk. It is a two-lever approach: having the best data available and making the best insights based on that data. We work diligently to categorize data and to build relevant data sets. Technology is the enabler of that

As an industry, are we relying too much on technology when managing risk?

Some level of automation in risk systems is desirable, but important decisions cannot and should not be completely outsourced to artificial intelligence. Advances in technology are enabling people to make risk decisions more efficiently. Blackstone relies on clear heads with the right data to assess our risks all the time.

Greater utilization of technology introduces a new risk. As a result, the importance of quality software is heightened. Technology managers increasingly need to focus on promoting “zero error” cultures in order to avoid problems. An associated risk to that is technology talent management. Once you have achieved best-in-class software, you must continuously fine-tune systems as markets change. If you have employee attrition, your job becomes more difficult. For technology managers, contingency planning in this area is essential, especially in today’s competitive [technology] jobs market. We have a growing problem: the introduction of a new risk coupled with a dearth of talent available in the market.

Reprinted with permission from John Wiley & Sons, publisher.

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