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  • How the rich get richer at 90 per cent the speed of light

    March 25, 2011 @ 10:25 am | by Laura Slattery

    Thinking about a career in stock market trading? Start by learning how to swim, because the global financial centres of the future may be located in the middle of the ocean. According to this fascinating report by BBC science and technology reporter Jason Palmer, mid-ocean island chains may become the optimal location for financial hubs because high-frequency traders are seeking to exploit the speed of light.

    High-frequency trading carried out by computers often depends on the varying prices of a financial instrument in two separate geographic stock markets. So exactly how fast the data travels – and how far it has to travel – can make the difference between a profit and a loss. As Palmer outlines in his report, Harvard physicist Alexander Wissner-Gross told a meeting of the American Physical Society this week that financial institutions are increasingly looking at ways to exploit this trick of the light. The only limit is the speed of light, and trades can now travel at nearly 90 per cent of this ultimate limit.

    Indeed, one of the many people to have recognised the profit potential of high-frequency trading is Irish businessman Brian Conlon, last year’s winner of the Ernst & Young entrepreneur of the year award. His company, the Newry-based First Derivatives, started developing and selling its own software for “low-latency, high-volume” trading three years ago.

    “If you think about highly liquid stock like IBM or Microsoft, the price is going to change maybe five, 10, 20 times a second,” he explained in an interview with Barry O’Halloran last September. “So if you’re going to make a decision like ‘I want to buy IBM when the price hits 100’, then you have to make that decision within microseconds or milliseconds. If you don’t get your order into the exchange, then the price will have changed and the price will be invalid. Similarly, if you look at any trading screen, they are ticking many times a second. If you’re doing a program trade you have to make that decision fast or else your price is out of date.”

    First Derivatives’ software is programmed to make these decisions – buy IBM at 100 and sell it at 110 – without human intervention and the risk of all those nasty “fat finger” losses. Algorithmic trading such as this is driving the mushrooming volume in daily global financial trades – in New York alone, the number of transactions carried out every day has gone from five million a decade ago to over a billion today. As a result, Conlon’s company, which he started in a spare bedroom 15 years ago, is doing very nicely, thank you.

    But why might a chunk of Wall Street eventually relocate to, say, the Azores? It’s because the latencies in global fibre-optic links – the time delay for a signal to shift it from one global financial centre to another – are lower in some locations for certain trades. Last year, Dr Wissner-Gross mapped the optimal points where financial transactions should originate in order to maximise the chances of buying low and selling high. The answer was midway between the two major financial hubs involved in the trade. This often meant the ideal location was at nippy high latitudes or mid-ocean.

    Unsurprisingly, companies weren’t too keen on deploying floating data centres in places where there’s nothing but blue sea on the horizon – not even a Costa Coffee – so now Dr Wissner-Gross is helping firms work out which geographic stock markets they are best positioned to trade from their current location. But there’s still a clear physical advantage, and therefore competitive advantage, to moving, he maintains. Desert island trades, here we come. How does the Atlantic Stock Exchange or the WaveStoxx 1000 sound?

    Just remember: if you can make money at 90 per cent the speed of light, you can lose it that fast too.

  • Ohmigod You Guys! Dublin’s Grand Canal Theatre defies gravity on its first birthday

    March 18, 2011 @ 10:55 am | by Laura Slattery

    Happy Birthday to the Grand Canal Theatre, which is celebrating its first anniversary today. As bubble legacies go, Dublin could do worse than this scarlet theatre, designed by architect Daniel Libeskind and built by, er, Nama developer Joe O’Reilly. If the Olympia is the interior of an elaborate birthday cake, the Grand Canal Theatre looks like the inside of a heart, with its patrons bobbling like blood cells through its ruby arteries to the strains of touring West End musical productions.

    These are now more likely to come to Ireland than ever before: The Sound of Music*, Sister Act and Dirty Dancing will all have opening nights down in Grand Canal Square over the next 12 months, as the theatre’s general manager Stephen Faloon tells John Collins in this week’s Business Podcast.

    So many ambitious Tiger-era projects were conceived with an entirely different set of demographics and disposable incomes in mind than would prove to exist by the time it came to launch day, leading to crimson faces all round. Is the €80 million Grand Canal Theatre different? We’ll have to wait until later this year for the company accounts that show how the bottom line is working out, but its management, Live Nation, is certainly celebrating bums on seats – more than 500,000 bums, to be precise, in its debut year.

    With any luck, it will only be the upholstery that’s in the red. Faloon has confidence that the theatre’s turnover will be able to defy the gravity of the ticket-repellent economy – the size of the venue certainly gives it a pulling power for big-name big productions that its competitors can’t match.

    “It’s an important thing in terms of economics. There’s 2,111 seats in the theatre,” says Faloon. ”If we look at, say, The Sound of Music, for example, which is coming to us in April, it’s a 14 x 45-foot truck show, so it’s a very, very big show. In terms of the physical cost of bringing that over and the physical cost of housing the 100 people who work on the show, you need to actually have the right amount of seats in your theatre to be able to make it worth their while,” he says.

    “They had a real problem, as did an awful lot of the West End producers, in bringing stuff over to Ireland, as really 1,000 seats didn’t make sense to them financially… I think the word is out now that stuff works here, that it’s financially viable for them to come over here. A year and a half ago we were banging down their doors getting them to come over here. Now they’re approaching us.”

    Like silver white winters that melt into springs – just to pluck a random example from the air – musicals count among my favourite things. These days, most of them are postmodern, yes-we-know-this-is-ridiculous eye-rollers rather than ultra-sincere Climb Ev’ry Mountain types. In any case, the common assertion that big musical numbers merge all human feeling into a crass mush is usually, as far as I can see, made by the same people who refuse to dance at parties. They’re not really emotionally qualified to judge.

    Sadly, anyone who was dragged along to an old-school, knee-punishing Andrew Lloyd Webber behemoth in their emo-teen years probably hasn’t recovered enough to buy a ticket for, say, the sharp, Californian gloss (but adult humour) of multi-Olivier-winning Legally Blonde or the amazingly feminist Oz prequel Wicked, both of which Faloon says he is hoping to bring to Dublin. But the real question is whether the ticket prices are indeed low enough to attract the musical-loving masses in these otherwise joyless times.

     *I saw this touring production of The Sound of Music in the Wales Millennium Centre in Cardiff, and while it’s great that Jason Donovan is in gainful employment, everyone knows the real stars of The Sound of Music are the talented kids who take it in turns to play Gretl, the youngest of the Von Trapps.

  • London 2012 tickets are now on sale – see you at the asymmetric bars

    March 15, 2011 @ 7:30 am | by Laura Slattery

    Tickets for the London 2012 Olympic Games are on sale from today, but don’t all pile in like steeplechasers at a water jump. It’s a marathon, not a 100 metre drug-assisted sprint. The window in which to try and buy some of the 6.6 million tickets is open for a full six weeks, and as part of what event chairman Sebastian Coe calls the “daddy of all ticketing strategies”, ballots will be held for all oversubscribed events.

    So if you are interested in elbowing your way to one of the cheap seats in the claustrophobia capital of the world, you’ve got until April 26th to apply via - by which time I’ll hopefully have figured out what the Modern Pentathlon is all about.

    Indeed, in a bid to contain my excitement about the fact that the Olympics is taking place on Ireland’s doorstep in 499 days, I’ve been trying to think about the bad and/or mildly annoying things about the whole sporting shindig.

    There’s the dispiritingly valid description (by Peter Hitchens) of a typical Olympics as a “festival of cheating”. There’s the tension – given the kind of investment-protection madness that went down at the South African World Cup – that you might be arrested for smuggling the wrong brand of what I will reluctantly call cola into the Olympic Stadium. There’s the deep-seated suspicion that Britain’s Beth Tweddle is the only female gymnast with breasts.

    What else? Well, there’s the constant comparison of various nations’ medal tallies, which somehow manages to miss the human drama of individual sporting achievement, burying it instead in a mindless jingoistic blather. There’s BBC Sport’s insistence on always treating viewers to Michael Johnson’s real-time reaction to a race, thus killing his enthusiasm of all spontaneity.

    There’s the not knowing which is worse: the wearisome nudge-nudge-wink-wink commentary on the beach volleyball or the endless sneering about it being an Olympic sport at all. There’s the sinking feeling, and I accept I might be alone in this, that all that lycra, flag-waving and earnestness combines to make a lot of otherwise amazingly fit people come across as bizarrely unsexy – with the exception of the rowers, that is, 80 per cent of whom resemble the posh twins in The Social Network.

    Yet, despite, or perhaps because, of these Olympic quirks, I’m already planning on spending my 2012 annual leave in London to coincide with this gold medal frenzy, which I plan to sleep off on the couch of anyone living in the south-east of England who I’ve so much as shaken hands with in the last decade – yes, that means you, acquaintance scanning this post via Twitter.

    Ticket prices soar as high as £2,012 – do you see what they’ve done there? – which is approximately £1,950 out of my price range, but happily there are also plenty of £20 tickets for early round events in sports no one is much interested in, like water polo or, er, football. I reckon the BMX cycling could be a fun pick, while the non-sporty person’s sporting hobby of choice, badminton, is surely worth a trip to Wembley Arena. Some people say that if the winners have to be decided by judges, it’s not really a sport, but such prejudice is not going to stop me from marvelling at the diving.

    In all, you can enter the race for tickets for up to 20 events, choosing from 650 sessions across 26 sports and 17 days. Only apply for what you can afford, because a successful bid for tickets means you have to pay for them. Applicants will find out whether or not they have secured their passports to plastic-seated viewing glory by June 24th, by which time Olympic sponsor Visa, the only card you can use, will have already debited the cost of the tickets.

    If I don’t make it to the Aquatics Centre for the synchronised swimming, it’s safe to say I’ll be there in spirit.

  • The boomer bulge and the business of ageing

    March 9, 2011 @ 4:54 pm | by Laura Slattery

    Please tick the box: Are you 35 to 39? 40-44? 45-49? 50-64? Or 65-plus? It’s an oddity of surveys and application forms that the categories often imply your tastes undergo distinguishable shifts with every event birthday, but only up until you hit 50 – or 65, if you’re lucky – and then you’re suddenly lumped into a homogeneous consumer mass.

    Apart from giving rise to cringeworthy stereotypes, for a vast number of product and service providers, this blunt approach to the over 50s is commercially crazy. However, as David Sinclair from the UK’s International Longevity Centre told the Business of Ageing conference in Dublin today, there are a dispiriting number of companies who don’t think the so-called “grey market” has anything to do with them at all.

    Despite the fact that disposable household income in the UK peaks in the 50-64 age bracket, the response from retailers is often “that’s not our demographic”, Sinclair noted. “I think there is a huge amount of denial here on the part of business,” he said, as evidenced by the fact that the dominant advertised image of consumption is often a high-heeled woman in her 30s, beaming as she swings her shopping bags.

    Incidentally, the Business of Ageing conference packs contained flyers for (among others) Flora Pro-Activ, RTÉ Lyric FM and an Emergency Response GPS bracelet – three companies who are clearly not in denial about their core demographic.

    In September, Kilkenny will host Greystock, which the organisers say will be Ireland’s first ever festival for the 50-plus generation. But market segmentation research on the varying interests and needs of the over 50s has yet to be conducted in depth in Ireland. As far as the UK goes, Dick Stroud, author of The 50-Plus Market, places less than 30 per cent of over 50s in what he calls the “charmed generation”. This is a high socio-economic group that tends to be in their late 60s and early 70s and in good health. But that doesn’t mean that people in their 50s now – who are more likely to be part of the “anxious generation” – will become happier in a decade.

    “This charmed group will move through and eventually disappear and the next group that comes through probably won’t have anything like the same wealth,” says Stroud. Similarly, George Magnus, senior economic adviser at UBS International Investment Bank, compared marketers’ attempts to capture the “grey market”  to a snake eating its prey: “It’s a bulge, and now it’s a bulge that’s moving into retirement.”

    The first baby boomers – the generation born in the post-war population spike – reach the traditional retirement age of 65 in 2011. It’s the generation that won’t take too kindly to what’s perceived as ageism at companies such as Interflora, which last year attracted criticism for bringing out a “happy birthday” range of balloon bouquets that stopped at 60. “Someone designed the product and didn’t think,” sighed Sinclair. Soon, they won’t be able to afford not to.

  • Barbie’s pink dream house fades to grey

    March 7, 2011 @ 1:30 pm | by Laura Slattery

    The six-storey Barbie flagship store in Shanghai has shut down. Photo: STR/AFP/Getty Images

    It was blessed with a restaurant, a spa and more Schiaparelli pink than a candyfloss museum, but now Mattel’s flagship Barbie concept store in China has shut down after less than two years. Based in central Shanghai, the retail haven for all-things-Barbie was part of toymaker Mattel’s grand push into Asia – and as such was at all too safe a distance from the pester power of the multi-careered doll’s Western fanbase.

    Mattel told the Bloomberg news wire this morning that it was planning a new “brand strategy” in China for Barbra Millicent Roberts, who at 52 years of age* is still not showing much sign of middle-age spread (although her waist is wider now than it was as late as the 1990s). The Shanghai sales were a bit lean, however, obliging Mattel to lower its targets for the 37,700 square foot store three times since its opening in March 2009.

    Despite the fact that her plastic limbs and blonde locks are, unsurprisingly, put together in China (and Indonesia), brand awareness of Barbie in the world’s fastest-growing economy hasn’t been sufficient to keep the dream house open for business. Luckily for Mattel, some $3 billion worth of Barbie-branded products are sold worldwide every year.

    Parents unnerved by all the princess pink that mushrooms out of the girls’ aisles in stringently gender-segregated toystores shouldn’t worry too much, however. Academic research published by the marketing expert Dr Agnes Nairn in 2005 suggests that as girls grow older, they reject Barbie – by, er, torturing her. Maiming, shaving, decapitating, microwaving… Barbie barbarism is just a rite of passage for the maturing Barbie-owner. Indeed, it’s probably only a matter of time before Mattel cashes in with its own Doll Destroyer Kit.

    * Technically, Barbie is 51. But it’s her birthday on Wednesday.

  • Goodbye gender discrimination, hello fairer premiums

    March 1, 2011 @ 1:51 pm | by Laura Slattery

    “Can’t believe the ruling on driving insurance – it’s about risk, not discrimination,” tweeted Laura Moore, ex-Apprentice candidate, this morning, after the European Court of Justice ruled that from December 21st, 2012, insurance companies will no longer be permitted to use gender as a factor when deciding premiums.

    “@ApprenticeLaura – Hopefully the cost of insuring my £55,000 sports car will go down now and you’ll be paying for it! Cheers!” replied her former television colleague @StuartBaggs.

    Most people are more sceptical about the insurance industry than Stuart Baggs the Brand, however, and reckon that while insurers will be quick to push up women’s premiums, they’re unlikely to be quite so eager when it comes to whacking a few quid off men’s. But while some premiums will undoubtedly be higher, this ruling has the potential, at least, to make the insurance market fairer for all.

    Moore’s tweet sounds like a reasonable objection to the ECJ’s decision, but she is only half-right. When men and women are charged substantially different insurance and life assurance premiums, it is usually a combination of both risk and discrimination. Insurers love citing the “boy-racer” factor, but the truth is there has been little transparency when it comes to insurers’ calculations of the “loadings” applied to men’s premiums. The ECJ ruling today means insurers will no longer be able to use gender as an excuse for mining profits from either male drivers or, crucially, from female pensioners.

    The flipside of the ECJ gender ruling  is that it will also affect the cost of buying an annuity – an annual pension – from an insurance company. As women live longer than men (and not just because we’re safer drivers), we currently receive a smaller annual pension for the same pot of money, which, don’t forget, is collated from smaller average earnings. The effect of the ECJ’s move is that men will get a lower annuity than they do currently, but women will get more. The gender pension gap narrows just a little.

    The insurance industry has been distinctly unhappy with the ECJ this morning, behaving as if it will no longer be able to calculate the risk that their customers might do the unthinkable and actually make a claim. That’s nonsense, of course, as the technology for basing an individual’s premiums on their own detailed driving record, as recorded by in-car devices, already exists and is indeed used by some forward-thinking insurance companies. Ultimately, these devices will be able to give a far more accurate assessment of risk than simply utilising crude gender stereotypes. Not all men go drag racing on the weekend.

    Whether premiums go up or down as a result of this ruling is almost beside the point, however. Insurers’ gall when it comes to milking premiums from their customers is enabled by more than either gender discrimination or a ban on gender discrimination. Instead, this is about a principle. “Today is an important moment for gender equality in the European Union,” says EU Justice Commissioner Viviane Reding. I agree.

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