Analyzing the market

First Derivatives, founded in Newry, Co. Down, is in partnership with a U.S. company, KX systems, offering a product that promises to analyze financial data at speeds faster than any database used by banks and commerce houses today.
At present, even the fastest systems on the market still lag several minutes behind the lightning speed changes in stocks and share prices on an average Wall Street trading day.
When making decisions about selling and buying, even split seconds can make a difference between profit and loss. First Derivatives’ Northern Irish staff say their product will pick up the slack.
“We are pushing back the limits of what people can do with large volumes of data,” said Danny Moore, the company’s New York office manager, who is from Glenavy, Co. Antrim.
“To put things into context,” Moore said, “in 1992, the New York Stock Exchange started publishing trades and quotes data on a CD at the rate of one CD per month. By June 2002, they were up to one CD per day.”
In July of this year, a record month for transaction on Wall Street, the exchange started using DVDs instead of CDs, in order to handle the vast volume of daily information — billions of individual trades in the course of a single day.
“There has been a 30-fold increase since 1992 in the volume of data,” Moore said. “We are the people who can handle it at the moment, and who can scale for the volume of data in the future.”
KX Systems’ product was the work of an Irish-American technology developer, Arthur Whitney, who has a long-established reputation in Silicon Valley for his mathematical solutions to the problem of handling large amounts of numerical information.
While KX plans to stay small, Moore said, First Derivatives is “the partner that provides the necessary services with a database vendor — presales, evaluation, implementation.”
With Moore in New York are colleagues Trevor Scott, from Maghera, Co. Derry, and Ian Kilpatrick, from Ballyclare, Co. Antrim, both in the harness with first-class honors degrees in their fields from Cambridge and Oxford, respectively.
Moore said that companies such as First Derivatives had helped amend the image of Northern Ireland as the land of the Troubles around the world.
“We have the highest A-level pass rate in the UK, in Northern Ireland,” he said. “Our company’s philosophy is about soaking up that talent. There may have been the Troubles, but there is a real core talent.”
It has taken the company a short time to make waves in New York. Its largest client in New York to date is Island, which handles one of every four trades on the Nasdaq stock exchange.
“At the beginning there was some concern that no one had heard of First Derivatives,” said Moore, who says that many major banks have been looking at the product. “I think we have silenced our critics by delivering.”
KX had already established an impressive client list before the partnership with First Derivatives.
The pool of database vendors offering extremely fast hardware is growing, and some analysts covering the high-tech world are skeptical of many of the companies’ claims.
Several years ago the database industry started to self-regulate with the founding of the Transaction Processing Performance Council, a non-profit corporation founded to define transaction processing and database benchmarks.
TPC President Michael Majdalany said that he had not seen KX or First Derivatives product in action, but added that database vendors were policing themselves well, with the help of the TPC.
An analyst who writes about the industry, Donald Burleson, noted that ultimately “it’s difficult to evaluate database performance objectively.”
However, Moore robustly defended First Derivatives’ product, and the company has staked a claim that it is fulfilling aggressively.
“The product is the only one in the market that allows real-time time-series analysis,” Moore said. “Its performance is normally 10-1,000 times faster than the others, depending on its application.”
And just as fast, the company’s staff reminds clients of the rich pool of talent that Northern Ireland can offer to the world.