The team of the project will design and implement an application, running simulations on a grid infrastructure, to support financial institutions in their strategic decisions affecting financial portfolios.

The present experiment aims at opening up the grid technology to a vast and crucial business as the financial markets and the bank sector. This will be done by creating and implementing a grid-based decisional support system for complex financial portfolio management problems. The new application will define the asset allocation with the best performances, according to the investor’s risk aversion. A software system, combined to a high performance computing architecture, will simulate the financial assets performances and define the best capital allocation in order to obtain the maximum profit at certain risk level.
The proposed grid architecture enables the management of a huge amount of data gathered by different sources, which will be used to simulate accurate scenarios of market developments and investment opportunities. At the same time, the grid environment will allow the implementation of complex solution algorithms, able to optimize financial planning problems.
The service will be offered through an on-line grid portal, where the financial consultant or broker will be able, by accessing the portal, to run customized simulations and solve complex financial optimizations problems.

Fact Sheet

• BE04 Financial Portfolio - Factsheet
• BE04 Financial Portfolio - Case Study

Grid as a New Financial Tool

The results and outcome of the experiment will have a deep impact on the world of financial investments. Such a tool could potentially be used by financial institutes, banks, insurance companies, financial service providers, retirement funds, governmental administrations and more directly by all traders, managers, analysts, corporate treasurers, brokers and private investors.
At the moment, the complexities of the decisional problems, along with the huge quantity of available financial tools, together increase the cost of the process of defining and managing customized investment solutions, which are usually offered only to institutional investors.
The adoption of decisional support tools like the system at hand could create new business opportunities for financial institutions in many ways:

• end-users could take advantage of the forecasting analysis and of the quantitative methodologies for the risk management of financial products which are currently offered;
• end-users could be supported in the definition of new financial products, aimed at offering a wider spectrum of investment possibilities for their customers;
• end-users could provide better customized solutions not only for institutional investors, but even for private clients with low management costs.

The major economic aim of the experiment is to impact the market players by: improving service levels, reducing costs and thus improving overall business performance.
This can likely lead to an increase of revenues since the application will be able to:

• run orders of magnitude faster, giving the business a competitive edge;
• develop distributed applications faster than ever before, ensuring that IT is never a bottleneck to a new business opportunity;
• create transformational opportunities through new products, new algorithms, and new ways of doing business that just are not possible without deploying grid technology.

At the same time, there is going to be a reduction of operating costs and capital costs and a large cutback in purchases of new equipment by driving up utilisation of existing resources. As more applications and users migrate onto the grid, the cost savings will continue to grow exponentially.

Business Model

The major economic aim of the experiment is to impact the market players by: improving service levels, reducing costs and thus improving overall business performance. This can likely lead to an increase of revenues since the application will be able to:

• run orders of magnitude faster, giving the business a competitive edge;
• develop distributed applications faster than ever before, ensuring that IT is never a bottleneck to a new business opportunity;
• create transformational opportunities through new products, new algorithms, and new ways of doing business that just are not possible without deploying grid technology.

At the same time, there is going to be a reduction of operating costs and capital costs and a large cutback in purchases of new equipment by driving up utilisation of existing resources. As more applications and users migrate onto the grid, the cost savings will continue to grow exponentially.

Partners

For more information you can visit the following websites:

• www.grid.org.il/_Uploads/170GridIBJohnDavies.pdf
• www.gridinfinance.org
• www.computerworld.com/industrytopics/financial/story/0,10801,101350,00.html
• www.eu-egee.org

or you can contact:

Carlo Figà Talamanca - Innova S.p.A. - e-mail: c.talamanca@innova-eu.net
Via G. Peroni, 386 - c/o Polo Tecnologico Industriale Romano - 00131 Roma
Tel. +39 06 40040358 / Fax  +39 06 40040364