Specialist supplierProgress Apamahas launched a real time
complex event monitoring software,which it claims could prevent
stock markets crashing and rogue traders committing fraud.
The firm's Risk Firewall is designed to monitorcomplex events in
real time and block them if necessary to reduce the effects of
mistakes or fraud.
The volatility of the stock market has been exacerbated by the
use of algorithmic trading by investment firms. They use computer
systems which automatically react to market conditions to buy and
sell stock.
Progress Apama is introducing a system that can monitor complex
event processing and stop automatictrading if a problem occurs. It
could prevent trading activities running out of control and
identify rogue trading paterns early, the supplier claims.
Progress Apama's Risk Firewallsits on top of Apama's complex
event processing platform to monitor for risky trading
patterns.
"Algorithmic trading allows thousands of trades to be processed
in seconds and you need something just as fast to monitor them,"
said Dr John Bates, founder and general manager of Apama.
"The risk firewall monitors risk parameters and just like a
network firewall it blocks certain traffic."
The firewall could be programmed to automatically stop trading
if certain risk parameters were reached, he said.The firewall can
be used to monitor and control trading desks and individual
traders.
"The new Risk Firewall provides traders with the ability to
deliver realtime risk evaluations that could pre-empt trades that
exceed their firm's market risk tolerance," he said.
Apama customers in financial
servicesincludeTurquoise and the FSA. But the risk firewall could also be used
in other industries that use complex event processing technology.
These include manufacturing production lines to spot faults quickly
and in casinos to identify fraud.
Rogue trader
Jerome Kerviel exploited high speed trading to single handedly
amass £3.6bn lossesfor French investment bank Societe Generale. The
junior trader used his knowledge of trade monitoring systems to
carry out unauthorised trades without being detected.