#Quant Invest Chicago and #HFT World Chicago: Build or buy technology to implement strategy

This panel discussion took place at Quant Invest Chicago and HFT World Chicago today. Panellists included Peter van Kleef, CEO, Lakeview Arbitrage, Dr. David Andre, CEO, Cerebellum Capital, Ken Kinkopf, President, Kinkopf Capital Management, John Beck, Consumer Solutions Architect, Force10 Networks, and Doug Gourlay, VP, Arista Networks. The panel was moderated by Peter Lankford, Founder, STAC.

This panel concluded that you need to focus on your unique needs, rather than buying whatever technology your competitors do, otherwise your budget can get blown without gaining any advantage. An example could be purchasing customized systems for the firm, which not only would be tailored to the firm’s strategy, but may in the long run be cheaper due to the elimination of excess or unnecessary features. Costs and needs vary according to strategy; HFT firms are dependent upon the most up-to-date hardware, while quants may be focused on systems.

In HFT, speed and being first counts – remaining first is not sustainable unless that firm is continuously using the newest and fastest technology. Profitability declines as competitiveness goes down; you’re not getting the trades, but you’re still spending on technology to remain in the game. Using your own infrastructure and having it in-house may be more expensive initially than outsourcing or using shared infrastructure, but may allow more ongoing adaptability, privacy and reliability.

Using code or algorithms, either from a departing employee or another firm, without fully understanding it and knowing how to maintain normally results in poor results. Innovating rather than reacting, even to a degree in the HFT space, is a way to be successful rather than spending a fortune on technology to maintain the status quo.

For more information, check out Quant Invest Chicago and HFT World Chicago.