Some Final Thoughts on Waters USA 2013

The Waters USA conference is a bit of a long day. There are 16 panels spread out over two streams and nine hours. Additionally, unlike other conferences that Waters hosts, it caters to both the sell side and the buy side. It's basically our Big Tent event.

As a result, the panel discussions are wide and varied. During the conference, I covered four panels: A winding discussion of C-level technologists that kicked off the day; a panel on today's trading landscape; a panel on mobility; and an out-of-industry presentation.

Because there's not a lot of crossover in that lot, I can't give one overarching theme for the day. But as we look ahead to 2014, here were a few things that jumped out at me.

● One provocative thought came from Will Mechem, managing director of high-frequency trading (HFT) shop Pan Alpha Trading, who discussed how his firm turned to Amazon's cloud to run back-testing and how this reduced the time it takes to run those procedures from weeks down to minutes or, at the most, hours.

Later on, though, he did bring up some reservations about storing old simulations in a cloud. If there was a security breach, it could expose the firm's strategies to the world. To solve for this unlikely-yet-worrisome possibility, Mechem brought up the idea of melding photo messaging application Snapchat with back testing.

Snapchat has seen significant growth since its launch. It allows users to send photos, videos, texts or drawings to a controlled list of recipients for a contained time of one to 10 seconds. Once the time has expired, the image disappears from the recipient's device and it is permanently deleted from SnapChat's servers.

So using a Snapchat design, a trading firm can create a back test and run it on the cloud to see if it works and after a set amount of time it disappears and is permanently deleted from the cloud platform.

● During the C-level discussion, which featured sell-side technologists, there was some talk about the vast amount of vendor contracts banks' IT have to juggle. Some said that number is in the hundreds, which would likely cause most buy-side CIOs to pass out. But when times are good, it's easy to let vendor contracts get out of control, and when times are bad, it's not always so easy to unwind those contracts and legacy platforms.

Correy Voo, CTO of platform services and applied innovation at UBS, acknowledged the need to consolidate his bank's sprawling systems, but interestingly, he said most firms shouldn't let their vendor relationships fall into the single digits (outside of those really tiny shops) either, because competition is necessary. His fellow C-levels broadly agreed.

Voo talked about how some third-party providers can get complacent if contracts are consistently renewed. Sometimes, you have to turn the screws a bit to get the attention you desire, even if it's with a vendor whose platform you've been using for the better part of a decade or two.

He gave one anecdote of a vendor he had used for more than 10 years with an annual contract in the hundreds of millions of dollars, and they had become so complacent that the quality of service had fallen off. When Voo threatened to leave, the vendor quickly brought in a whole new product support staff and redoubled its efforts to please UBS.

Obviously, the Swiss banking giant would be a massive loss for a vendor, whereas a $3 billion hedge fund might be viewed as more expendable. But it's important to properly manage vendor contracts and make sure that they always stay on their toes.

● On a panel discussion discussing the evolution of mobile technologies, Stefan Ott, global head of distribution IT for UBS Global Asset Management, said something that I found very intriguing: "We're now at the point where, in certain parts of the world but not necessarily in the US, we're moving away from bringing your own device, back to fully-managed corporate devices."

Over the past year, I've heard nothing but success stories about asset managers implementing BYOD strategies inside their four walls to allow portfolio managers and advisors to move outside those walls. This is the first firm I've heard of to retreat, even if not completely. He also was quick to note that something similar wasn't "necessarily" going to in the US, but that doesn't mean it won't happen.

Tony Lalli, solutions architect at BNY Mellon, has a theory that employees will start to choose to carry around two personal phones: As an example, they'll keep their two-year old iPhone and use it as their BYOD work phone, and their brand new Samsung Galaxy will be used to store photos of grandma and anything of a more, ahem, personal nature—that wasn't Snapchatted, anyway.

I hate carrying around one phone, much less two, but plenty of people are used to having one work-supplied device and one personal phone, so it's not such a crazy idea that that this becomes another milestone in the BYOD debate.

For more coverage of what went down at Monday's conference, click here.

Did you attend Waters USA and have some thoughts of your own? Do you want to gossip about who wore what to the American Financial Technology Awards? Shoot me an email (anthony.malakian@incisivemedia.com) or give me a call (646-490-3973).