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September 9, 2009

Code Thefts Don't Worry Brokerages

By James Ramage

So what do firms do to keep algo-related secrets under lock and key? In Credit Suisse's AES unit, one of the tactics Doherty's team uses to manage security is to limit people's ability to move large amounts of data out of the firm. They also manage AES's source code closely, he said, and regulate access to specific sections of code. The AES unit also performs routine code integrity checks, he said.

At Instinet, security and surveillance consists of "standard detective behavior," said John Comerford, the firm's global head of trading research. His team monitors emails and limits what employees can copy onto external drives.

"Our code management systems have figured out who's taking out what bits of code," Comerford said. "So, if we see someone who has downloaded a giant bit of code that they wouldn't normally use, it's something we can always go back and see."

Instinet also considers its analytics as important to it algos, and a key competitive advantage. But the firm has a natural safeguard to protect them: its infrastructure. Many firms have their analytics closely combined with their algorithmic structure, Comerford said. Instinet, instead, built a separate analytics platform that feeds its algorithms.


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