Monday, June 29, 2015

Concerns over risk in Algorithm trading - Technology Boon or Bane ?

Financial regulators are alarmed by the increasing clout of algorithm trading or high frequency trading (HFT) and fear that it could result in a systemic failure.

 The Financial Stability Report (FSR) June 2015, released last week, aired serious concerns on algorithm trading or algo trading leading to stock price manipulation as well as alienate retail or small investor from stock markets.

 The report is a collective assessment of a sub-committee of the Financial Stability and Development Council, which includes all financial market regulators. Interestingly, the reports in the past have also emphasised the risks involved with HFT.

 While volumes have increased sharply in the cash segment of stock markets in India, there is a concern whether markets could be rigged through these trades. Algo trading has undergone a substantial change with the development in information processing and communications technologies over the last two to three decades.

 Algo trading was introduced in India in April 2008 with the advent of direct market access (DMA).

Though these trades are monitored by the Securities and Exchange Board of India (SEBI), which is mandated to protect the interests of small investors, the FSR report expressed apprehensions that they could result in market manipulation.

 “The increased complexities of algorithm coding and reduction in latency due to faster communication platforms needs focussed monitoring as they may pose risks in the form of increased possibilities of error trades and market manipulation,” FSR report released this week noted.

The report also pointed fingers at certain instances of abnormal market movements in Indian stocks which have been attributed, by market experts, to algo trading/HFT.

Close watch

SEBI keeps a close watch on the developments to formulate appropriate policies based on recommendation by the Senior Supervisors Group (SSG), a group of 10 supervisors which issued a report on April 30, 2015 that assesses risks associated with algorithmic trading.

The increasing volume of algo trades/HFT and their attendant risks have forced regulators the world over to have a closer look at gaps in the existing regulations and explore ways of strengthening them.

The global debate on this issue was triggered by Michael Lewis’s best-selling book,  Flash boys: A Wall Street Revolt,  published in March last year, which discusses the rise of high frequency trading in U.S. equity markets and argues that the U.S. equity markets are rigged by the HFT traders.

“The debate over whether algo trading is good or intrinsically bad is a philosophical divide that is now becoming universal.

“The key is to check whether the system is being abused as a manipulative device or an innovation. The truth lies in between,” says Somasekhar Sundaresan, Partner, J. Sagar Associates, advocates & solicitors. According to him “every system is capable of manipulation.”

 The algo trading system too has the capacity of being harnessed for the betterment of the market with greater liquidity, finer spreads and less volatility, says Mr. Sundaresan, adding, “the new technology needs to be embraced and harnessed for prevention of abuse rather than be shunned for fear of the unknown.”

 However, the moot question remains whether Indian markets are matured enough to embrace algo or high frequency trades?

While huge institutional investors will be able to take advantage of arbitrage of micro and nano-seconds, by engaging in high frequency trades, the interest of retail investors could be jeopardised.

While huge institutional investors will be able to take advantage of arbitrage of micro and nano-seconds, by engaging in high frequency trades, the interest of retail investors could be jeopardised

Friday, June 26, 2015

WORK -When too much is not enough


"I recently had a telephone call from the CEO of a $5 billion company who has travelled four to five days a week for many years. She sounded exhausted.

“When times get tough,” she told me, “the only way I’ve ever known is to muscle through. I just can’t do it anymore. I’ve hit bottom. The problem is that I’ve been numb for so long, I’m honestly not sure if I can find my way back to a sane life.”

A week before that I had led a session in Europe at a large multinational company for a senior team whose members were eager to find a solution to the sense of being overwhelmed that they and their employees were feeling. The session began at 7:30 a.m., at their request.

One week before that I spent a day shadowing a senior leader at a Fortune 150 company. It began with a business review that he conducted with one of his subordinates and two other colleagues. The meeting ran for four hours without a single break, even to go the bathroom. That wasn’t unusual – it’s simply the way this leader works.

I could go on. The demands of work for employees, at multiple levels and across multiple industries, have become untenable.

Several recent reports in The New York Times have called attention to this, including one about the effects of long hours on Wall Street. Another described a recent study of the insidious effects of a 24/7 work culture on families and especially on women’s career prospects.

There is a simple word for this way of working: It’s inhumane.

White-collar employees working at higher-salary jobs plainly have it better, but that’s grading on a curve. They’re being paid six-figure or seven-figure incomes – but, if they are working 60, 70, 80 or even 90 hours a week, what is the toll on their quality of life – and, ultimately, on the quality of their work?

It isn’t realistic to attempt to build sustainably high-performing companies by way of unsustainable work practices. Meeting people’s core needs, rather than simply trying to squeeze more out of them, is what makes it possible for them to work more effectively.

When people work an excessive number of hours, they devolve from a higher state of capability and consciousness to a more primitive, reactive one. Fatigue, as Vince Lombardi so accurately observed, makes cowards of us all.

Fear is the primary driver of this crisis. Public companies are terrified of being outflanked by competitors, failing to meet their quarterly targets and watching helplessly as their stocks are pummeled by impatient investors. Leaders and managers live in fear of not delivering their numbers and losing their jobs, and as a result constantly look for ways to cut expenses and head counts, which puts ever more pressure on their employees to do more with fewer resources.

It’s a vicious, accelerating cycle that serves no one well.

None of this is new. What has changed is the intensity and relentlessness of the pressure, supercharged by digital life and a global economy that extends the once-finite working day to all hours of the day and night.

Employees have their rhythms set by the same technology that was invented to make their lives easier and free their time. Computers not only operate at high speeds for hours on end, but also run multiple programs at the same time. We try gamely to keep up, but it’s a Sisyphean challenge and we’re doomed to fall behind.

Human beings are designed to pulse between expending and renewing energy, and neither is sufficient by itself. In a culture of overwork, we fear that any time off will be seen as evidence that we’re slacking – and that we’ll fall further behind in our work.

Slack, I learned while attending a “Conscious Capitalism” conference in New York, actually is a potential competitive advantage. Zeynep Ton, a professor at the Massachusetts Institute of Technology in Cambridge, shared her fascinating research into high-performing retailers. The single most important factor, she concluded, was “slack” – the degree to which companies put more employees, rather than fewer ones, on the floor at any given time.

Employees operating with some slack, Ton explained, add value that those pushed to the limit cannot. They feel better, have more time to spend with customers, keep closer track of inventory, make fewer mistakes and feel more highly engaged and committed at work.

Instead, too many fear-driven employers operate from a perspective that is narrow, shallow and short term. They fail to see that encouraging employees to renew intermittently during the day not only helps them to rest and refuel, but also lets them step back, reflect and prioritize.

After years of studying great performers across a wide range of fields, the researcher K. Anders Ericsson concluded that the optimal amount of time to devote to highly focused work is no more than 4.5 hours a day. He also found that any given period of work should be limited to no more than 90 minutes, followed by a period of rest.

In short, we perform better when we’re truly rested, whether that means by getting a sufficient night’s sleep or by renewing throughout a day. Great athletes consciously manage their work-rest ratios to ensure that they are at their best when they are actually performing. It’s called periodisation. We must do the same to perform at our best.

The culture of overwork is slowly killing us. What will it take for companies to recognise that humanity, simply caring about people, is a huge competitive advantage? "

(Tony Schwartz is the chief executive of The Energy Project.)

© 2015 The New York Times

Employees operating with some slack add value that those pushed to the limit cannot. They feel better, have more time to spend with customers, keep closer track of inventory, make fewer mistakes and feel more highly engaged and committed at work.

Friday, June 19, 2015

Uncovered: Pandyas-Romans trade link

An excavation in Keezhadi, Sivaganga district, has thrown up a wealth of information on the floruishing Pandya trade with the west.

An ongoing excavation of a Sangam period habitation by the Archaeological Survey of India (ASI) is poised to throw more light on the flourishing trade of the Pandyas with the west and their rich culture, which was the envy of the Romans.

The Bengaluru-based Excavation Branch VI of the ASI has taken up the excavation at Keezhadi village, 12 km south east of Madurai, in Sivaganga district.

Into the third month, the exercise has already thrown up very interesting antiquities – glass/pearl/terracotta beads; terracotta figurines; grooved roof tiles and early historic pottery.

“This is the ASI’s major excavation in Tamil Nadu after Adichanallur,” says K. Amarnath Ramakrishnan, Superintending Archaeologist and director of the current excavation.

It was found to possess archaeological wealth “that may provide crucial evidence to understand the missing links of Iron Age to early historic period and subsequent cultural developments.”

The excavation area, a mound, referred to as ‘Pallichandai Thidal,’ has a circumference of 3.5 km and spans 80 acres. It is contiguous to ancient settlements like Konthagai and Manalur. “We chose the mound raising about one to 2.5 metres above the ground level as it is relatively undisturbed,” says Mr. Amarnath. “We have found the finest variety of black and red ware bowls at the site,” says M. Rajesh, assistant archaeologist.

The most interesting findings in the 32 quadrants dug up so far are the damaged brick structures, including walls. The bricks are unique to early historic period and they measure 33 cm in length, 21 cm in breadth and five cm in height.

Noted epigraphist and domain expert for the excavation, V. Vedachalam, attributes the age of the remains to third century BCE to third CE. “The earthenware contains Tamil Brahmi script. The black and red pottery belongs to the Sangam period. The bricks belong to early historic period and similar ones were found in Kaviripoompattinam, Woriyur, Alagankulam and Korkai,” he says.

The Roman ware found at the site supplement the historical references to a flourishing trade between the Pandya kingdom and the Roman Empire. Historically, these settlements would have been part of Kuntidevi Chaturvedimangalam, named after a Pandya queen.

The first major excavation of a habitation undertaken by the ASI in south Tamil Nadu will go into 2016. “The Director (Exploration and Excavation), ASI, Syed Jamal Hasan, who visited the site on May 15, was impressed with the findings,” says Mr. Amarnath.

The ASI is likely to extend the period of excavation by a year. The final report will be released after corroborating the antiquities with existing evidence and conducting various scientific analyses.

Research scholars from the University of Madras and Government Arts College, Krishnagiri, assist the ASI team in the excavation.

Aspirational parents and the harm they do - GEORGE MONBIOT

Perhaps because the alternative is too hideous to contemplate, we persuade ourselves that those who wield power know what they are doing. The belief in a guiding intelligence is hard to shake.

We know that our conditions of life are deteriorating. Most young people have little prospect of owning a home, or even of renting a decent one. Interesting jobs are sliced up into portions of meaningless drudgery.

The political system that delivers these outcomes is sustained by aspiration: the faith that if we try hard enough we could join the elite, even as living standards decline and social immobility becomes set almost in stone. But to what are we aspiring? A life that is better than our own, or worse?

Last week a note from an analyst at Barclays’ Global Power and Utilities group in New York was leaked. It addressed students about to begin a summer internship, and offered a glimpse of the toxic culture into which they are inducted.

“I wanted to introduce you to the 10 Power Commandments … For nine weeks you will live and die by these … We expect you to be the last ones to leave every night, no matter what … I recommend bringing a pillow to the office. It makes sleeping under your desk a lot more comfortable … the internship really is a nine-week commitment at the desk … an intern asked our staffer for a weekend off for a family reunion – he was told he could go. He was also asked to hand in his BlackBerry and pack up his desk … Play time is over and it’s time to buckle up.”

Play time is over, but did it ever begin? If these students have the kind of parents featured in the Financial Times last month, perhaps not. It spoke of parents who had already decided that their six-month-old son would go to Cambridge then Deutsche Bank, or whose two-year-old daughter “had a tutor for two afternoons a week (to keep on top of maths and literacy) as well as weekly phonics and reading classes, drama, piano, beginner French and swimming. They were considering adding Mandarin and Spanish. ‘The little girl was so exhausted and on edge she was terrified of opening her mouth.’”

In New York, play date coaches charging $450 an hour train small children in the social skills that might help secure their admission to the most prestigious private schools. They are taught to hide traits that could suggest they’re on the autistic spectrum, which might reduce their chances of selection.

From infancy to employment, this is a life-denying, love-denying mindset, informed not by joy or contentment, but by an ambition that is both desperate and pointless, for it cannot compensate for what it displaces: childhood, family life, the joys of summer, meaningful and productive work, a sense of arrival, living in the moment.

Governments used to survey the prevalence of children’s mental health issues every five years, but this ended in 2004. Imagine publishing no figures since 2004 on, say, childhood cancer, and you begin to understand the extent to which successive governments have chosen to avoid this issue. If aspirational pressure is not enhancing our wellbeing but damaging it, those in power don’t want to know.

But there are hints. Mental health beds for children in England increased by 50 per cent between 1999 and 2014, but still failed to meet demand. The number of children admitted to hospital because of self-harm has risen by 68 per cent in 10 years, while the number of young patients with eating disorders has almost doubled in three years. Without good data, we don’t have a clear picture of what the causes might be, but it’s worth noting that in the past year, according to the charity, Young Minds, the number of children receiving counselling for exam stress has tripled.

In the cause of self-advancement, we are urged to sacrifice our leisure, our pleasures and our time with partners and children, to climb over the bodies of our rivals and to set ourselves against the common interests of humankind. And then? We discover that we have achieved no greater satisfaction than that with which we began.

In 1653, Izaak Walton described in The Compleat Angler the fate of “poor-rich men”, who “spend all their time first in getting, and next in anxious care to keep it; men that are condemned to be rich, and then always busie or discontented”. Today this fate is confused with salvation.

Finish your homework, pass your exams, spend your 20s avoiding daylight, and you too could live like the elite. But who in their right mind would want to? —© Guardian Newspapers Limited, 2015