Big Data, Real Time

Technology provider StreamBase Systems helps market participants develop more accurate pricing models with its “information in motion.”

When it comes to making pricing decisions, the value of timely information cannot be underestimated.

That is why what StreamBase Systems is so important.

The nine-year-old software company specializes in developing a “complex event processing” (CEP) platform that allows clients to rapidly build an internal platform that can analyze and act on data streaming on a real-time basis. The end result? Users have the ability to make instant decisions based on thousands of points of often critical information in the moment. StreamBase Systems chief executive officer Mark Palmer calls it, simply, “a database for information in motion.”

“As opposed to looking backward, we can look at real-time decisions,” he says.

And it is not just the speed of information that differentiates a CEP platform like StreamBase, but the quantity and variety of data it delivers. StreamBase’s platform counts more than 150 points of connectivity from places as varied as Reuters, Morningstar, market data feeds, and even Twitter. The flow of data varies but the platform can monitor and synthesize as much as 50,000 events changing per second, according to Palmer.

CME Group implemented StreamBase’s platform in June 2009, licensing the software company’s CEP platform to help traders generate settlement prices for options products. The information has helped CME Group improve its time to market and adapt pricing models at a time when speed and accuracy are more paramount than ever.

“They have to price and settle their products,” Palmer says. “It’s better and more efficient during the day… and this allows more accurate prices than the end of the day.” Also, the use of this complex event engine can allow CME Group to introduce more products by helping cut through the complicated pricing challenge.

Adam Honore, research director for the institutional securities practice at Aite Group, says CEP has helped “strengthen the whole industry in capital markets. It’s become a staple… and an accelerator.”

“Wall Street has become very automated and electronic. Especially with extraordinary events like the May 2010 Flash Crash, there’s so much information that people can’t tell what’s going on,” observes Palmer. “It’s no longer reasonable to have algos with latency, or reports at the end of the day.” To that end, StreamBase introduced its “LiveView” product – a field of live business intelligence that Palmer says puts a “heat map” around the information that is most relevant to users.

The CEP platform StreamBase developed can be used beyond the realm of settlement pricing. CME Group is considering using the advanced software platform to figure out theoretical pricing, analyze risk, and monitor regulations and compliance. Palmer says the platform has helped the exchange expand upon more flexible pricing structures. Ultimately, the platform is a means to an end, an engine to manage complex and varied streams of data no matter what the purpose.

Learn more about CEP on The StreamBase Event Processing Blog or follow @StreamBase on Twitter.

Karen Epper Hoffman is a full-time freelance writer with more than 15 years’ experience covering financial services, technology and general business issues. For the past three years, Karen has been OpenMarkets’ technology writer and has written articles about co-location and algo trading. In addition to OpenMarkets, Karen has written for American Banker, Bloomberg, Entrepreneur and Internet World. She lives in Europe.

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