Too Much Data, Too Little Information
OTAS Technologies has positioned itself as a provider of real-time, live market-data analytics that can put the portfolio manager on an even information footing with the trader. Among major buy-side institutions, Franklin Templeton is one of OTAS’ major customers, and seven of the top ten institutions by AUM are customers, according to CEO Tom Doris.
“The overriding theme for us in 2014 has been the growth awareness in the buy side and the sell side of the need for analytics, not just metrics but actual analytics that extract information from data,” Doris told Markets Media.
The market has moved from awareness of the application of big data analytics to market data and trading data to actually trying to implement it. “We’re talking to our client base and they’re fully aware of the benefits that are available, but they’re trying to navigate the options open to them to realize those benefits. They’re aware where the solutions may lie. And they’re tackling it with us.”
The core problem that OTAS is addressing is the fact that markets have transitioned away from the point where data is informative.
“Back when there was comparatively little data, you were informed if you had that data,” Doris said. “These days, there’s so much data that having an entire options feed doesn’t actually inform you as to the sentiment of the options market on the stock that you’re interested in.”
Firms need to apply analytics in order to extract that sentiment in an actionable format, so that traders and portfolio managers can actually take the feed and apply it to their investment process. As it currently stands, without analytics and without the intelligence, they’re just sitting at a screen full of numbers that don’t really mean anything.
“The layer that we put over that does the analysis, and does it in a fashion that brings to bear some domain expertise, so it’s not just the artificial intelligence and the machine learning algorithms and the mathematics, but it’s also an understanding of what’s important to traders and portfolio managers and analysts, and what’s important in the markets,” Doris said.
The main modules within the OTAS platform, OTAS Core, tracks various market observables, such as short interest activity, insider transactions, CDS spreads, and EPS momentum, to provide a clear picture of sentiment from all of the market participants involved in the price formation process.
Another module, OTAS TradeShaper, “analyzes the real-time market microstructure which heretofore was the purvey only of the high frequency traders,” said Doris. “It provides visualization of the microstructure, and alerting on the back of unusual microstructure dynamics to be used by standard, high-touch execution traders and institutions.”
The newest module OTAS Base, provides clients with programmatic access to the analytics, enabling “the more sophisticated end of the market to now connect through their programming languages directly to our content feed and integrate it into their analysis systems,” said Doris. “In addition, it allows developers at buy-side institutions to integrate our content into existing applications. If you’ve got a proprietary EMS or OMS or PMS that your users are already using, then you can take our content and deliver it into that platform.”
Featured image via Dollar Photo Club
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