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Innovations in Trading and Technology

17 November 2012

Unleashing the Power of Mobile and Social Information

Mobile and social technologies have liberated data, creating a new paradigm for information consumption and driving the need for a new model for capital markets information distribution.

It has been said that control of information is power. If true, then the people have finally seized power.

Today’s information environment is filled with vast points of distribution and access. Twitter users notified the world of President Obama’s reelection ahead of CNN’s broadcast, smartphone apps provide near real-time stock prices, and anyone can tap the Federal Reserve Economic Data (FRED) system to uncover trends on everything from historical inflation to jobless claims. Meanwhile, bloggers are engaging in such high-level analysis that many attribute the revitalization of nominal GDP targeting as an idea originating from economist circles online.

Information -- the driver of the capital markets -- is, in a word, decentralized. The entire life cycle of trading is electronic, and the tape is now social; social networks (most notably, Twitter) are the new trading pit of the capital markets. These are no longer consumer- or retail-oriented networks. Hedge fund analysts and desk traders are already signed up (though largely anonymously), and the rapid feel of the markets is now conveyed via Twitter stream.

Traders tweet real-time resistance levels on AAPL in volatile markets. Analysts share research on the term structure of CDS pricing. Experts stream ideas to trade China at far more depth, and to many more people, than quick sound bites on CNBC. And bloggers debate potential Keynesian impacts on economic growth. (Self promotion: follow me @henrychien for ideas.)

Today, exchange traded funds (ETF) that track everything from credit indices to interest rate spreads provide both insight in and access to hard-to-reach markets. The trading desk, once the primary resource for gathering and analyzing information and trading efficiently, no longer holds the same advantage. And the sacred data terminal, the traditional stalwart of any trader, no longer has the same proprietary edge.

Opportunities, however, remain vast, though identifying them often requires a new way of thinking. Mobile and social technologies, along with the cloud, will put tech research analysts on the store floor of Microsoft’s next product launch. Real-time crowd-sourced analysis -- from quarterly earnings to real-time sentiment -- is the next stage of research innovation and alpha generation.

The distribution is social. The protocol is open. The value is synthesis. A new model for capital markets information is underway.

For more on how mobile and social technologies are shaping next-generation capital markets workflows and driving the need for flexible infrastructure, download TABB Group’s latest Vision Note, Mobile Markets: Too Flexible to Fail (below).

Mobile Markets - Too Flexible to Fail

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3 Comments to "Unleashing the Power of Mobile and Social Information":
  • Missing

    20 November 2012

    If "control of information is power" doesn't it seem a little ironic that stuff found on Twitter could be a valuable data source?  As you suggest, perhaps the power shift is how people dissect their various feeds and use them in collaboration with other mosaic data collection efforts. Very timely, thank you.

  • Anon_avatar

    25 November 2012

    Pai, isn't "valuable" really in the eye of the beholder, or in this case, reader of the tweet?  To a great extent, it's about separating the wheat from the chaffe.  Though this is not to my liking as a smart form of research, there are those who believe they can glean valuable info, if not insights from perhaps even a tweet.  Investor, beware. Then again, it's only money, right?  

  • Comment_dsc_4908ws_small

    27 November 2012

    There's information to be gleaned not only in aggregate but I think as an open distribution platform - definitely will be need for curators to identify quality research

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