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jerryking : aladdin   4

BlackRock bets on Aladdin as genie of growth
MAY 18, 2017 | FT | Attracta Mooney.

Aladdin, a technology system developed by BlackRock, the world’s largest asset manager, is also clever. It analyses the risks of investing in particular stocks, figures out where to sell bonds to get the best prices, and tracks those trades. And it is wily too, combing through huge data sets to find vital pieces of information for investors.....Launched in in 1988, when it was developed as an internal risk tool for BlackRock employees, Aladdin has become bigger, better and far more influential. It is now one of the best-known pieces of technology in the fund industry and is widely used by BlackRock’s rivals, including Deutsche Asset Management, the $733bn investment house, and Schroders, the UK’s largest listed fund manager.

But as Aladdin — which stands for Asset Liability and Debt and Derivatives Investment Network — has grown, concerns have mounted about its influence on markets. There are also questions about whether Aladdin can maintain or increase its hold on the asset management industry as rival technologies emerge.....with more and more investors using Aladdin, there are concerns about its impact on markets. The argument is that if trillions of dollars are being managed by people using the same risk system, those individuals may be more likely to make the same mistakes. i.e. Aladdin may increase systemic risk!!...Aladdin has a 9 per cent share of the 250 largest asset managers and a 15 per cent share of the insurance market, according to Credit Suisse, the Swiss bank. .......Many asset managers have recently begun the slow process of overhauling their technology systems after years of neglect. Previously, fund houses often had hundreds of different systems, but Aladdin and similar enterprise platforms allow businesses to cut out huge chunks of IT, reducing costs and jobs in the process.

At the same time, running money has become more complex and there is more regulatory scrutiny of investment decisions. This has meant that fund houses have been forced to assess how technology can help their investment processes.

“Money management is very tricky these days. Any tool that can help you with decisions is going to be highly in demand,”
........Under plans by Larry Fink, BlackRock’s chief executive, Aladdin will become an even more important source of cash for the fund giant. Mr Fink recently said that his goal is for Aladdin and the wider BlackRock solutions business to account for about 30 per cent of revenues in five years, compared with 7 per cent currently.......Even if there is a stumble in demand, BlackRock is already eyeing up other avenues for Aladdin.

In the past two years, it began promoting Aladdin, which comprises 25m lines of code, in the retail investment space, targeting wealth managers and brokers.

Last week, UBS Wealth Management Americas became the first wealth manager to say it will use Aladdin for risk management and portfolio construction......“Technology has always been a key differentiator for BlackRock. It is more essential to our business than ever before. We believe technology can transform our industry,” he said.

.......
Aladdin  asset_management  BlackRock  institutional_investors  Laurence_Fink  wealth_management  systemic_risks  order_management_system  algorithms  platforms 
january 2018 by jerryking
At BlackRock, a Wall Street Rock Star’s $5 Trillion Comeback - The New York Times
SEPT. 15, 2016 | NYT | By LANDON THOMAS Jr.

(1) Laurence Fink: “If you think you know everything about our business, you are kidding yourself,” he said. “The biggest question we have to answer is: ‘Are we developing the right leaders?’” “Are you,” he asked, “prepared to be one of those leaders?”

(2) BlackRock was thriving because of its focus on low-risk, low-cost funds and the all-seeing wonders of Aladdin. BlackRock sees the future of finance as being rules-based, data-driven, systematic investment styles such as exchange-traded funds, which track a variety of stock and bond indexes or adhere to a set of financial rules. Fink believes that his algorithmic driven style will, over time, grow faster than the costlier “active investing” model in which individuals, not algorithms, make stock, bond and asset allocation decisions.

Most money management firms highlight their investment returns first, and risk controls second. BlackRock has taken a reverse approach: It believes that risk analysis, such as gauging how a security will trade if interest rates go up or down, improves investment results.

(3) BlackRock, along with central banks, sovereign wealth funds — have become the new arbiters of "flow.“ It is not about the flow of securities anymore, it is about the flow of information and indications of interest.”

(4) Asset Liability and Debt and Derivatives Investment Network (Aladdin), is BlackRock's big data-mining, risk-mitigation platform/framework. Aladdin is a network of code, trades, chat, algorithms and predictive models that on any given day can highlight vulnerabilities and opportunities connected to the trillions that BlackRock firm tracks — including the portion which belongs to outside firms that pay BlackRock a fee to have access to the platform. Aladdin stress-tests how securities will respond to certain situations (e.g. a sudden rise in interest rates or what happens in the event of a political surprise, like Donald J. Trump being elected president.)

In San Francisco, a team of equity analysts deploys data analysis to study the language that CEOs use during an earnings call. Unusually bearish this quarter, compared with last? If so, maybe the stock is a sell. “We have more information than anyone,” Mr. Fink said.
systematic_approaches  ETFs  Wall_Street  BlackRock  Laurence_Fink  asset_management  traders  complacency  future  finance  Aladdin  risk-management  financiers  financial_services  central_banks  money_management  information_flows  volatility  economic_downturn  liquidity  bonds  platforms  frameworks  stress-tests  monitoring  CEOs  succession  risk-analysis  leadership  order_management_system  sovereign_wealth_funds  market_intelligence  intentionality  data_mining  collective_intelligence  risk-mitigation  rules-based  risks  asset_values  scaling  scenario-planning  databases 
september 2016 by jerryking
Goldman Sachs Has Started Giving Away Its Most Valuable Software - WSJ
By JUSTIN BAER
Sept. 7, 2016

Securities DataBase, or SecDB, the system remains Goldman’s prime tool for measuring risk and analyzing the prices of securities, and it calculates 23 billion prices across 2.8 million positions daily. It has played a crucial role in many of the seminal moments of the firm’s recent history, including its controversial trading just ahead of the financial crisis.....There is perhaps no better sign of the changes that have engulfed Wall Street than this: Goldman has recently started giving clients the tools that made it a trading powerhouse, for free.

The firm’s motives aren’t altruistic; rather, many of the edges that once made Goldman’s traders feared and admired have been blunted. New rules have limited banks’ trading risks, and made it costly to hold large inventories of stocks and bonds on their books. And electronic trading has squeezed margins, dimming the clamor of trading floors across Wall Street....Traders and executives tap into SecDB to inform how to price securities, and how the value of those assets may change with a twist on the dial on any one of thousands of potential variables. That information can be used to analyze potential trades—and then to monitor the risks posed by those positions.

What made it the envy of Wall Street, though, was its ability to scale up to include new classes of securities, new trading desks, even whole businesses. And the data it harnessed was all in one place.
Wall_Street  Goldman_Sachs  tools  traders  risk-management  informational_advantages  software  free  databases  platforms  CIOs  proprietary  slight_edge  Aladdin  Martin_Chavez  scaling  SecDB  seminal_moments  asset_values  scenario-planning  stress-tests 
september 2016 by jerryking
BlackRock’s Aladdin: genie not included - FT.com
July 11, 2014 | FT |By Tracy Alloway.
(Risk management technology is no substitute for investor instinct)
Aladdin is BlackRock's current, state of the art risk and order management system. Aladdin has been described as BlackRock’s “central nervous system” but what is less well-known is that the operating platform also acts as the brains at some 60 other financial firms which altogether handle a whopping $14tn worth of assets.

At banks, investment managers and trading outfits around the world, Aladdin’s genie is hard at work analysing portfolios, running stress test scenarios and generally employing BlackRock’s “collective intelligence” to perform a whole host of financial functions....the increasingly significant role that Aladdin and its 25m lines of code plays in the wider financial markets has, with notable exceptions, largely been overlooked....The role of these formulas or programs tends to go unnoticed but they often play two key roles in the build-ups to financial crises. Firstly they give investors and traders a potentially dangerous sense of control over risk. Second, as their use proliferates, they also encourage a build-up of “one-way” bets as investors increasingly come to rely on similar data and analysis.
BlackRock  Laurence_Fink  asset_management  pretense_of_knowledge  long-term  risk-management  Wall_Street  collective_intelligence  systemic_risks  order_management_system  algorithms  platforms  Aladdin  stress-tests  overconfidence  overlooked  false_confidence  scenario-planning  financial_crises 
july 2014 by jerryking

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