COMMENT: The truth about investment banks on GitHUB
Well, well. It has been reported that my old haunt Goldman Sachs is planning on releasing APIs enabling access to its platform called Marquee on GitHub. For the un-initiated GitHub is a repository of open source software that individuals and companies can publish their code on. Anyone can make use of the code uploaded, and also make contributions like bug fixes (note the opportunity for free labour).
Marquee is a web-based platform that has been built on top of the risk and pricing engine SecDB. Goldman is planning to release APIs (Application Programming Interfaces) to interact with the Marquee platform over the web.
Now, this move is significant because right now only the holy trinity of bulge brackets Goldman Sachs, JP Morgan and Morgan Stanley have GitHub accounts with anything meaningful in them. Banks like UBS, Credit Suisse, Barclays, Bank of America and Deutsche either don’t have GitHub accounts or they have nothing in them. For those that do, apart from JPMorgan’s Quorum all the projects are non-financial in nature - they are merely software engineering tools and utilities. Therefore, for a Bank to start publishing code to directly connect to services like pricing engines and historical feeds is a step into the 21st century. It’s also something they can boast about at campus recruiting events.
Is Goldman's move really such a big deal? Clients already have the capability to do price discovery with banks like Goldman via third party systems like TradeWeb or through single dealer platforms that often have an API element. Requests for Quotes (RFQs) will often be auto-priced by SecDB, but they are black boxes hidden behind the platform. What this sounds like to me is that Goldman will be trying to provide tools and services for quantitative researchers and traders to bake into their workflow, and then encourage trading off the back of that.
Let’s be clear about this, however. - This is not the secret sauce. SecDB and the newer Marquee are not the only reason why Goldman has historically been a trading powerhouse. SecDB is a risk management platform, and its ability to efficiently price a derivative contract according to a theoretical model does not generate alpha - it’s when extra data like a trading desk's positions, client profitability and costs/commissions are plugged in that it becomes interesting. And clearly that is not data that’s going to be made publicly available via these APIs.
If you're a client, accessing SecDB via Marquee APIs will perhaps lower your infrastructure bills and your time to market depending on the services made available. But it will come with a cost: Goldman will know what you're up to, and will likely charging eye-watering sums for the more useful features.
Ultimately, I suspect that Goldman will want to monetise its platform like Amazon has done. The data it harvests in the process will no doubt be of tremendous value in the long term. JP Morgan is reportedly not far behind in making aspects of the Athena platform available externally, but Goldman's Github effort suggests it's going a step further. A word of warning to Goldman developers involved in this effort – you still won’t be classed as revenue generators!
Ian MacDonald is the pseudonym of a senior technologist at an investment bank
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