High School Trader: I Didnt Trade $72 Million

Editorial Staff
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Another day, another journalistic scandal. Two weeks after Rolling Stone retracted its story of a gruesome sexual assault on the campus of the University of Virginia, New York magazine is now walking back its story of a Stuyvesant high school junior who claimed that he earned $72 million while trading on his lunch break.

The young man in question, Mohammed Islam, admitted to CNBC that the number was inflated and later to The New York Observer that he and his friends had made the whole thing up. Although New York magazine has not removed the story from its website, it has amended its Reasons to Love New York headline – it now reads Because a Stuyvesant Senior Made Millions Picking Stocks. His Hedge Fund Opens As Soon As He Turns 18. New York editors also added the following not-quite correction at the bottom of its story written by Jessica Pressler:

Editors note: Mohammed Islam has denied that he made $72 million on the stock market. Our story portrays the $72 million figure as a rumor; the initial headline has been changed to more clearly reflect the fact that we did not know the exact figure he has made in trades. However, Mohammed provided bank statements that showed he is worth eight figures, and he confirmed on the record that hes worth eight figures.

One reader of Traders thought that something was odd with the initial story. He wrote to us:

If the kid started from near zero and made $72 million over 8 years he would have to generate about $36,000 in profits each – EVERY – day. Put another way, he would have to have a cumulative annual return over the period of over 200%! And he was trading at lunch hour? Not exactly at time known for volatility. Seems like we’re missing a lot of the facts here. Story also appears highly suspect.


Good points.

Traders ran its story about the New York magazine piece because we thought it was interesting and the hype reminded us of the days of the dot-com era and before the collapse of the markets in 2008. The quotes and allusion to The Wolf of Wall Street also peaked our interest, as in who in their right mind would invest in these kids? New York magazine does not name the hedge fund manager who wanted to invest $150 million in the teens even as it stands by Islams plans to open a hedge fund.

We certainly hope that Islam and his buddies are truly contrite and have learned from their lessons. Study, graduate, donate some money to charity and go to a good school sounds like a good plan of action for this crew. If this is their only ethics violation, they might have a long career as a trader and portfolio manager.

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Not every young trader has trouble with the truth. Last spring, Traders profiled ayoung quant trader fresh from UC Berkeleyand lists thetop quantiative trading schoolsof 2014.

STA of Wisconsin Annual Conference Gallery

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With the temperature dropping and threats of possible snow in the forecast, let’s look back to the warm days of summer with this gallery from the STA of Wisconsin. The Security Traders Association of Wisconsin held its annual conference in downtown Milwaukee on August 7th through the 9th at the Hotel Pfister.

After hours, attendees from the local brokerage and buyside community gathered at the Harley Davidson Museum for dinner and networking. Attendees hailed from Citigroup, RW Baird, Cortina Asset Management, Instinet, 1482 Asset Management, and other high-powered firms.It looked like a fun night.

Traders is proud to present a gallery of images from the Security Traders Association of Wisconsin’s 2014 Annual Conference.

For other Traders slideshows of industry conferences, charity fundraisers and networking events, please visit our Traders Photo Gallery.

Top 2014 Trends: A Big Year for Big Data

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Although trading volumes continue to shrink − from 2.6 billion shares traded in 2008 to around 1.4 billion shares traded in 2013 − the one thing that has grown besides fines at JPMorgan Chase is the sheer volume of data that bombards traders each day. Big Data may have started out as a marketing buzzword among the tech set a few years ago, but it is a reality for every trader and broker on Wall Street and beyond.

This year, Traders profiled several firms that rely on Big Data to score their next big trade. While Bloomberg terminals and data feeds from Thomson Reuters arent going away soon, Big Data traders like Flyberry Capital of Cambridge, Mass., scour the Internet for information on earthquakes, weather patterns and forecasts as well as traditional news feeds found online.

We believe all of the price movement is subject to information shocks. Basically, when you see that theres an event coming, thats when you see a huge price movement, said Michael Chang, a Massachusetts Institute of Technology grad who started Flyberry Capital with other MIT alums for their growing hedge fund. The question is: How can we identify those things? We try to use some novel information to inform us and make the right decision.

Flyberry Capital caught the eye of the people behind BattleFin, the so-called Hunger Games of quantitative hedge funds. Each quarter, dozens of established and newbie hedge funds enter to compete for the prize of startup funds. The only requirement is a plan and vision that utilizes Big Data.

Were looking for disciplined, repeatable, differentiated strategies, said Tim Harrington, a hedge fund manager and one of the men in charge of the BattleFin tournaments. We want someone who is looking at the world in a different way. We stay away from guys who rely on sellside research or technical analysis. Were looking for the strategies that leverage data streams, and managers who can mine large amounts of data and make sense of it. We pay particular attention to strategies that use weather, Twitter feeds and other data sources that have not been picked over and over-analyzed.

Citing hedge fund giants Two Sigma and Renaissance, BattleFin believes that the future of hedge fund investment strategies centers on Big Data and the managers who are willing to look for data beyond their Bloomberg terminals and Thomson Reuters feeds.

And Big Data is having an impact on trading floors in another way: Its shrinking them. With the focus on automated trading, algorithms and aisles of high-speed computers crunching data, the once bustling trading floor is getting a lot quieter. UBSs zeppelin-hangar-size trading floor in Stamford, Conn., now houses human resources and IT support staffers instead of being jam-packed with shouting traders, according to The Wall Street Journal.

But Big Data has not replaced human being entirely. According to legendary NYSE floor trader Kenny Polcari, traders and brokers are needed to spot glitches and make quick decisions that often elude the machines. Pointing to the flash crash in 2010 when NYSE floor traders helped keep the damage under control, Polcari doesnt mince words: “When the [expletive] hits the fan, people will still want to talk to people.”

Hedge Funds’ Bullish Gold Bets Defy Goldman Outlook

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(Bloomberg) — Hedge funds are the most bullish on gold since August, defying Goldman Sachs Group Inc.s prediction that the rally in prices will fade.

The net-long position in New York futures and options climbed for a fourth week, the longest stretch of increases since July, government data show. Futures jumped 2.7 percent last week, the most since June, as a plunge in global equities erased about $2 trillion from the value of stocks.

Holdings in exchange-traded funds backed by gold rose for the first time since October as investors sought protection from the rout. While prices are heading for a second consecutive month of gains, Jeffrey Currie, Goldmans head of commodity research, says bullion will drop as the U.S. economy improves.

We are seeing safety trade toward gold, Peter Sorrentino, a senior vice president who helps oversee $1.8 billion at Huntington Asset Advisors in Cincinnati, said Dec. 11. Investors have begun to see that the equity market is priced for a scenario that may not come to pass. Thats led some to flee the market and use gold as a storehouse.

The net-long position in gold rose 31 percent to 104,532 futures and options contracts in the week ended Dec. 9, according to U.S. Commodity Futures Trading Commission data. Short holdings tumbled 22 percent, the most since Aug. 12.

Futures Rally

Futures slipped 1.1 percent to $1,209.10 an ounce at 9:21 a.m. on the Comex in New York. The Bloomberg Commodity Index declined 1.3 percent last week as the Bloomberg Dollar Index slid 0.6 percent. The MSCI All-Country World Index of equities fell 3.8 percent, the most since May 2012.

Holdings in global bullion ETPs increased by 2 metric tons, snapping seven weeks of losses. Assets in the SPDR Gold Trust, the biggest such fund, jumped the most since July.

Gold has climbed 7 percent since reaching a four-year low of $1,130.40 on Nov. 7 on signs that central banks in China, Europe and Japan will add to stimulus efforts in a bid to boost growth. More evidence of slowing global economies would further support gold as investors seek a haven, said Frances Hudson, an Edinburgh-based global thematic strategist at Standard Life Investments Ltd., which oversees $334 billion.

Money Supplies

Gold surged 70 percent from December 2008 to June 2011 as central banks increased money supplies on an unprecedented scale, spurring concerns that inflation will accelerate. The metal tumbled 28 percent in 2013, the biggest drop in three decades, amid gains for the U.S. economy.

The Thomson Reuters/University of Michigan preliminary December index of consumer sentiment increased to the highest since January 2007, figures showed Dec. 12. Federal Reserve policy makers will meet this week as officials debate the timing of the first interest-rate increase in eight years.

The stronger U.S. economy and the ability for the Fed to be able to begin to pursue a less accommodative monetary policy are the real drivers of gold, Goldmans Currie said Dec. 9. Gold will likely continue to slowly grind lower next year, he said, reiterating a forecast for prices to drop to $1,050 in 12 months.

Rising interest rates reduce golds allure because the metal generally offers investors returns only through price gains. U.S. inflation expectations, measured by the five-year Treasury break-even rate, fell 38 percent this year, set for the biggest slump since 2008.

Commodity Wagers

Bets on higher oil prices climbed 3.7 percent to 191,268 contracts before futures tumbled to a five-year low, CFTC data show. West Texas Intermediate, the U.S. benchmark, slumped 41 percent this year, signaling stable consumer costs and cutting demand for gold as a hedge against inflation.

A measure of net-long positions across 11 agricultural commodities jumped 13 percent to 499,354 contracts, the biggest gain in five weeks.

Investors are betting on gains for wheat prices for the first time since June. Net-bullish wagers on corn climbed 17 percent to 230,194 contracts, the highest since May. U.S. production of ethanol, a gasoline additive made from the grain, has reached a record, government figures show.

We have seen strong export numbers, and then on the ethanol side another record week of production, Chris Narayanan, the head of agricultural research at Societe Generale SA in New York, said Dec. 11. Demand continues, and thats keeping prices supported.

U.S. Stocks Remain King to SkyBridge on Muted World Growth

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(Bloomberg) — SkyBridge Capital, manager of about $12.1 billion in assets, bets U.S. stocks will rise as much as 10 percent next year as lagging growth in Europe and emerging markets deter investors.

S&P is still the king, Troy Gayeski, a partner and senior portfolio manager at the New York-based money manager, said by phone on Dec. 11. The U.S. is the brightest spot in the global economy.

The S&P 500 Index of equities has advanced 8.3 percent in 2014, poised for a third year of gains, compared with a 7.1 percent decline in the MSCI Emerging Markets Index as of 2:40 p.m. in Istanbul. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against those of 10 trading partners, rose 9.7 percent this year, the most in the gauges nine-year history. That rally isnt over yet, Gayeski said.

Robust U.S. market performance comes as the worlds biggest economy grew 3.9 percent in the third quarter, poised for a 2.3 percent expansion in 2014, according to a Bloomberg survey. In contrast, the euro areas economy may expand 0.8 percent this year, while the average 2014 growth estimate for 15 emerging economies in Europe and Africa is 1.7 percent, Bloomberg surveys show.

Europes been on a decline for a long time, and we dont see any change in that, Gayeski said. Before the crisis, it was a 2 percent economy. Now its a 75-basis-points economy. With the U.S. Federal Reserve expected to increase interest rates for the first time since 2006 next year, a meaningful investment in emerging markets doesnt make sense, Gayeski said. For them will be another year of underperformance.

Interest Rate

Gayeski in February told Bloomberg it was just too early to invest in emerging markets. You have to wait for the cycle to play out.

The Fed may increase its benchmark rate to 0.40 percent from near zero in the second quarter of 2015, according to a Bloomberg survey of about 80 analysts. That would cause European and emerging markets assets to suffer disproportionately, Gayeski said.

A tighter U.S. monetary policy would damp demand for higher-yielding assets, and is weighing on emerging markets, London-based Nicholas Spiro, managing director of Spiro Sovereign Strategy, said last month.

The SkyBridge Multi-Adviser Hedge Fund Portfolios LLC – Series G is up 2.71 percent as of the end of October, headed for its third consecutive year of gains.

Oil Plunges

This years slump in oil prices is a further boon to U.S. consumer stocks, Gayeski said. West Texas Intermediate crude has slumped 41 percent this year to $57.74. Besides, India, Japan and Turkey will be the big winners, while Venezuela, Russia and Iran will be the biggest losers from the slump, he said.

This is like the last nail on the coffin for those who thought the commodity supercycle could get restarted, Gayeski said. As inflationary pressures recede and investors digest slower growth elsewhere, money has been flowing to the U.S.

To contact the reporter on this story: Taylan Bilgic in Istanbul at tbilgic2@bloomberg.net To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net Srinivasan Sivabalan

Meet the High School Junior Who Traded His Way to $72 Million (Updates)

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He has money to buy a new apartment in Manhattan and he has earned a reported $72 million from trades in oil and gold after losing a lot in penny stocks. Hes also being courted by hedge funds, one of which would like to seed him $150 million for his investment future. And he wants to buy a new BMW but his dad still has to drive him around. Hes still a student in New Yorks vaunted Stuyvesant School and hes too young to have a drivers license.

[Update: The aspiring trader in question has admitted it was all fake.]


Meet Mohammed Islam, a Stuyvesant junior who made a mint trading and may start his own fund very soon. This rather breathless New York magazine profile hits all the high points – teachers in awe of their students money, slick sycophants, and the phrase one billion dollars – but we learn very little about what makes Islam tick. Or whether this young man could do more harm than good for himself and his clients.

We do learn that this quiet, cherubic trader has the fever for trading:

Mo started with penny stocks. A cousin showed him how to trade. He loved the feeling of risk-the way his hand shook making the trade-but he swore it off after losing a chunk of the money hed made tutoring. I didnt have the b—s for it, he said. He was 9.

Like any high school student with a promising talent, Islam has drawn new friends to his circle, one of whom seems as enamored with a recent Leonardo DiCaprio movie as he is attending college and making his first billion before his 21st birthday. When Mo talks about creating some amount of influence with his wealth, his partner/friend blurts out: Like in Wolf of Wall Street! said Damir Tulemaganbetov, a fellow schoolmate and son of an oligarch Kazakh. And Mo is Jordan Belfort.

(Someone get Damir some media training. Stat.)

Traders wonders where young Islam will attend college. We have a few suggestions for some great quantitative trading schools – and our advice is free.

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Traders profiles a young quant trader fresh from UC Berkeley and lists the top quantiative trading schools of 2014.

WSW 2014: Jennifer Hidiaris Rises from Analyst to Market Structure Guru

Editorial Staff
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WSW 2014: Jennifer Hidiaris Rises from Analyst to Market Structure Guru

Rising Star Award

Jennifer Hadiaris

Firm: ROYAL BANK OF CANADA CAPITAL MARKETS

When Jennifer Hadiaris starts working at RBC nine years ago, she was a business analyst on the cash equity trading desk, working for Bobby Grubert, head of U.S. Equities.

“I started at RBC in 2005, and working with a supportive mentor like Bobby was the best introduction to the business I could have had,” she said. “I was fortunate to work with the cash team as RBC was expanding. Seeing the business strategy adapt and market share grow was exciting, and I learned so much.”

But five years later, when RBC started a market structure team in 2010, it represented a very different type of opportunity, and Hadiaris raised her hand.

See A Slideshow of All The Winners

“It might not seem like a natural transition to market structure from the strategy side of the business, but RBC’s culture recognizes the value diverse backgrounds add. By sitting on the strategy side, you could see how the equity business was impacted,” she said. “I remember seeing our exchange fees go up year over year. You could really start to see how market structure issues, like maker-taker models, impact the trading business.”

As it turns out, her move has given Hadiaris a front-row seat in examining market structure during a period when not only has market structure been shifting but market structure debate has taken center stage, attracting interest beyond traditional Wall Street circles including the mainstream press. Initially, the market structure team was under electronic trading. Another mentor for Hadiaris was RBC’s then-head of electronic trading, Brad Katsuyama, founder of IEX, who has himself emerged as a prominent figure in market structure debate.

“While market structure is something we and our clients have been focused on for several years, it has been exciting being part of this at a time when people have been proactive about wanting to enact change in the market. I think the public dialog gets the market to a better place,” she said.

Joining the market structure group at its inception in 2010, Hadiaris became head of U.S. market structure in 2013. Having started in an internally focused role in equities research, she enjoys the client-facing aspect of her current role, which has allowed her to meet with clients representing a broad range of companies and responsibilities, including portfolio managers, corporate clients, issuers and analysts.

Moving forward, Hadiaris sees a broadening of the market structure debate into new assets and new markets.

“I know a lot of the conversation has been about U.S. market structure, so we remain focused on the U.S., but we have also worked in the past year to expand the team globally and coordinate our content in other regions,” she said. “A lot of our clients are global and multi-asset in nature, so the same issues they are experiencing in the equities market, they are experiencing in other countries and other asset classes.”

Top 10 Trends That Rocked the Trading Floor

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You’ve got to hand it to Michael Lewis. A year after the movie version of his book “Moneyball” hit theaters to critical acclaim, the former Salomon Brothers broker and “Liar’s Poker” author scored another home run with “Flash Boys.” His expose of high-frequency trading, its impact on the market and how a new buyside dark pool, IEX, was going to level the high-speed trading field struck a chord with traders, to say the least. In fact, if he would have walked onto the podium at a conference of traders earlier this spring where his book was lambasted by the panel and the crowd, New York’s Finest would have needed riot gear to save the hated muckraker.

Though some critics have subsequently downplayed the impact of his book and questioned his allegations, they must admit that this 288-page tome inspired the debate of the year. Think about this: Name another book about financial practices that spurred outraged headlines, heated exchanges on cable news programs, congressional hearings and a call for new rules. We’ll wait.

While a book set off the firestorm of the year, several other events also rocked the trading floor. Exchanges and trading floors saw a return of initial public offerings with scores of companies going public, led by the showstopper IPO of Alibaba of China. Dark pools continued to fascinate with the details around their volumes – they were designed for large-block trades years ago, but today traders are using them for small orders that once went to open, lit exchanges like NYSE and Nasdaq. As these traditional exchanges continue to fight back against their diminishing market share, law enforcement officials are launching probes into these dark pools to look for predators. In an age of transparency, the dark pool days may be lighting up.

Traders continued to pine for volatility ever since the markets calmed down in late 2012 during the Euro crisis, when the notion of Greece and other credit-strapped nations leaving the EU currency roiled the markets. Since then, the stock markets across the globe have been relatively stable, with indices in the U.S. climbing to new heights. Thanks to Vladimir Putin, Ebola and soft European job numbers, however, the markets saw the sharpest swings in years during the summer months before returning to solid, stable numbers in the fall.

In the next few pages, the editors of Traders look at the news stories and trends that had the biggest impact on the lives of traders and brokers. Whether it was the threat of new regulations, rising commissions, the challenges of trading a once-shady digital currency or the changing role of algorithms, these issues kept traders awake at night and staring at their wall of flat-panel monitors during the day.

All in all, 2014 was a year of high fines, record returns on indexes and lower trading volumes. It was a subtle year, but it certainly wasn’t a boring one. We examine the impact the top trends had on the past 12 months, and what role they may play in the coming year. A different one will appear each day.

Commissions Rebound After Four-Year Slump

By John D’Antona Jr.

The U.S. equity market has finally come to the light at the end of the commissions tunnel ? growth in broker-dealer fees during the last year.

U.S. equity commissions are forecast to climb 10 percent to $10.3 billion in 2014, the first growth seen in five years. The final data will be made public next spring, but overall things are looking up given the preliminary data.

For the 12 months ending February 2014, the pool of U.S. cash equity commissions increased 10 percent to $10.34 billion from $9.30 billion, according to Greenwich Associates, an equity market consultancy. All-in commission rates also grew slightly for the first time in five years, ticking up just over 2 percent from 2013 levels.

This increase, Greenwich said, was driven largely by investors’ thirst for content-written research, corporate access, market color and analytics to provide insight into where their orders are going and where their executions are ultimately coming from. In fact, 80 percent of the commission wallet increase came from spending on research and other related services. Research still drives the bus.

The Greenwich findings are from several recent studies, based on 590 interviews with U.S. institutional equity traders and portfolio managers in the first quarter of 2014. The interviews also found that mid-tier brokers have gained share on the bulge bracket, providing both sector-specific trading and research services to institutional clients.

But when assessing combined high-touch and low-touch commission flows, the top nine firms still control an aggregate 64 percent share of commission.

“While bulge bracket providers have seen their presence in U.S. equity research eroded, they have done a much better job protecting their actual commission share in trading ? the engine of revenues and profits in the equities business,” said Jay Bennett, managing director at Greenwich Associates.

However, the growth in commissions is tempered by the fact that the consultancy found there has been little to no growth in electronic trading.

The sellside competitive landscape also showed signs of its continued evolution, Greenwich reported. While the top tier still sees the majority of the flow, Greenwich Associates data shows a strong trend towards mid-tier brokers for both execution and research. In 2007, the bulge bracket had a 78 percent share of trading and 71 percent share of research. Now in 2014, the bulge bracket has only 64 percent of trading and 53 percent of research, with mid-size/regional brokers and sector specialists benefiting.

The importance of mid-tier brokers is the most noticeable in research, as they now account for 40 percent of the research wallet. When asked which firms are most important for small/mid-cap research and advisory, of the top 10 firms cited by investors, seven fall into the mid-tier bucket.

Said Kevin McPartland, Greenwich Associates’ head of market structure and technology research, “Investors don’t want a jack-of-all-trades, they want a master of one.”

Finra Fines 10 Wall Street Firms Over Analysts IPO Pitches

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(Bloomberg) — Citigroup Inc. and Goldman Sachs Group Inc. were among 10 banks fined for failing to shield analysts from pressure to promote stocks a decade after a U.S. crackdown sought to end Wall Street conflicts of interest.

The investment banks promised favorable research to Toys R Us Inc. and its private-equity owners to win roles in its initial public offering, the Financial Industry Regulatory Authority said today in a statement. The regulator fined the firms a total of $43.5 million, faulting them for implicitly or explicitly making promises that their analysts would give positive coverage. Six of the 10 firms didnt have adequate supervisory procedures to prevent the practice.

Citigroup, Goldman Sachs, Credit Suisse Group AG, Barclays Plc and JPMorgan Chase & Co. were fined $5 million each. Deutsche Bank AG, Bank of America Corp., Morgan Stanley and Wells Fargo & Co. will pay $4 million. Needham & Co. will pay $2.5 million. The firms didnt admit or deny wrongdoing, according toFinra.

The firms rush to assure the issuer and its sponsors that research was in synch with the pitch being made by their investment bankers caused them to overstep the prohibitions against analyst solicitation and the promise of favorable research, Brad Bennett, Finras chief of enforcement, said in the statement.

New Pressures

The case shows how new pressures came to bear on analysts after the worlds biggest securities firms agreed to pay $1.4 billion in 2003 in what was then the largest-ever settlement for violating securities laws. In that sweep, state and federal regulators spotlighted incidents in which analysts helped their firms win investment-banking business by publicly touting stocks that they privately disparaged.

Such abuses helped fuel a boom in stock prices during the late 1990s and a subsequent bust that erased trillions of dollars of shareholder wealth. Securities firms promised to impose so-called Chinese walls between divisions so investment bankers couldnt push analysts to recommend that investors buy their corporate clients shares.

Finra, the largest independent securities regulator in the U.S., said today that Toys R Us and its owners demanded that analysts and bankers agree on valuation. For example, the owners told Barclays that they were interviewing analysts after having been burned on other deals in which they learned too late about analysts negative sentiments, according toFinra.

Expressing Enthusiasm

In May 2010, Citigroups investment bankers hosted a chaperoned call with the firms research analyst, who then e- mailed a supervisor. I so want the bank to get this deal! the analyst said in the e-mail, according toFinra. Days later, bankers told the retailer that they could count on Citis firm-wide support and advocacy for the Toys story and valuation.

Other firms contacted Toys R Us after making their pitches, expressing enthusiasm about the firms prospects and providing assurances that the views of bankers and analysts were aligned,Finrasaid. Toys R Us and investors, including KKR & Co., withdrew the IPO filing last year.

We are pleased to have resolved and put this matter behind us, Sophia Stewart, a Citigroup spokeswoman, said in a statement. Spokesmen for the other firms either declined to comment or didnt immediately respond to messages seeking comment.

Idea Dinners

Citigroup agreed to pay a separate $15 million fine last month overFinraallegations that the bank failed to supervise research analysts and prevent them from sharing material, non- public information. The regulator cited idea dinners for clients, during which at least one analyst disparaged stocks that he had recently upgraded.

Most of the 10 firms named today also agreed to the 2003 settlement. They include Citigroup, Credit Suisse, Morgan Stanley, Goldman Sachs, JPMorgan and Merrill Lynch, which was later acquired by Bank of America. Bear Stearns Cos., which was subsequently purchased by JPMorgan, also settled then, as did Lehman Brothers Holdings Inc., UBS Warburg and U.S. Bancorp Piper Jaffray.

Boring Is The New Black: Capital Markets Predictions for 2015

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1. The Fall and Rise of HFT: A new avalanche of books de-bunking uber-writer Michael Lewiss Flash Boys: A Wall Street Revolt, which claimed that HFT markets are rigged, will exonerate the practice. A new tranche of players will enter the market, using the Securities and Exchange Commissions new guidelines as armor.

2. Boring is the New Black: The Wild West days of banking will be a distant memory as next years bankers will continue to avoid risky practices in the face of regulatory scrutiny. They will revert to wearing bowler hats and carrying umbrellas. Real-time cross-border, cross-market surveillance will be a must have, not a nice to have, to keep the CEO out of the headlines.

3. A Hedge Fund Will Be Saved by a Self-Learning Algorithm: In 2015 algorithms will become smarter. Fast trading will include self-learning risk frameworks that can detect and shutdown any rogue human or algorithm behavior.

4. The Internet of Tractors Changes Things: The Internet of Things willcome to commodities markets and connected machines will begin feeding valuable information to traders. For example, tractors will tell commodities traders how the crops are faring.

5. The FBI Swallows the CFTC and SEC: Having failed to rein in markets fraud, the U.S. Commodity Futures Trading Commission and U.S. Securities and Exchange Commission will be forced to work for the Federal Bureau of Investigation to help catch the perpetrators.

6. Internet of Things Invades the Trading Floor: Financial institutions will embrace smart network surveillance devices such as indoor location tracking to determine who is talking to whom, video analytics for monitoring facial expressions and stress levels, and audio analytics to detect keywords in communications.

7. The Birth of Traders Rights: Traders rights activists will invade dealing floors to protest the banks invasion of traders privacy.

Dr. John Bates is chief marketing officer / business leader for big data analytics, cloud & industry solutions for Software AG.

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