Introduction to Financial Technology

by Freedman

• ISBN13: 9780123704788
• ISBN10: 0123704782
• Format: Hardcover
• Copyright: 2006-04-24
• Publisher: Elsevier Science

Summary

The financial technology environment is a dynamic, high-pressured, fast-paced world in which developing fast and efficient buy-and-sell order processing systems and order executing (clearing and settling) systems is of primary importance. The orders involved come from an ever-changing network of people (traders, brokers, market makers) and technology. To prepare people to succeed in this environment, seasoned financial technology veteran Roy Freedman presents both the technology and the finance side in this comprehensive overview of this dynamic area. He covers the broad range of topics involved in this industry--including auction theory, databases, networked computer clusters, back-office operations, derivative securities, insider trading, bootstrap statistics, optimization, risk management-in order to present an in-depth treatment of the current state-of-the-art in financial technology. Each chapter concludes with a list of exercises; a list of references; a list of websites for further information; and case studies. A Powerpoint presentation that outlines each chapter's main points is available in a companion instructor's website, and an online instructors manual is available. *The first textbook on financial technology *Accessible to both finance professionals needing to upgrade their technology knowledge and technology specialists needing to upgrade their finance knowledge *On-line Instructors Manual available

Author Biography

Roy S. Freedman is Founder, Inductive Solutions and Adjunct Professor, Financial Engineering, Polytechnic University, NY

Table of Contents

Preface	ix
What Is Financial Technology?	1	(28)
Financial vs. Commercial Systems	1	(4)
Financial vs. Gambling Systems	5	(3)
Financial vs. Military Systems and Physical Delivery	8	(6)
Nonphysical Communication and Delivery	14	(3)
The First Wireless Network	17	(7)
Notes and References	24	(3)
Discussion Questions	27	(2)
Prices, Interest, Time	29	(42)
Financial Terms	29	(9)
Numbers and Prices	38	(13)
Time Is Money: Loans and Interest	51	(10)
Days, Months, and Years	61	(6)
Notes and References	67	(2)
Discussion Questions	69	(2)
Algorithms and Financial Technology	71	(34)
Financial Algorithms	71	(3)
Spreadsheets	74	(6)
Interpreters and Compilers for Procedural Languages	80	(10)
Spreadsheet Algorithms for Interpolating Prices and Rates	90	(12)
Notes and References	102	(1)
Discussion Questions	103	(2)
Financial Products	105	(38)
Technology of Cash Flows	105	(7)
Technology of Yields	112	(10)
Zero Credit Risk/Zero Coupon Bonds	122	(5)
Equities, Dividend Discounts, and Laplace Transforms	127	(8)
Databases for Past, Present, and Future Prices	135	(4)
Notes and References	139	(3)
Discussion Questions	142	(1)
Identifying Financial Objects	143	(46)
Symbology: Identifying Issuers and Owners	143	(13)
Other Identifiers in Financial Databases	156	(5)
Exchange Ticker Symbols	161	(12)
Non-Exchange Traded Products and Portfolios	173	(12)
Notes and References	185	(3)
Discussion Questions	188	(1)
Physical Aspects of Financial Networks	189	(44)
Financial Network Infrastructures	189	(7)
Origins of Electronic Financial Communication Networks	196	(12)
The Technology of Virtual Delivery	208	(6)
Market Data Technology: From Ticker to Consolidated Tape	214	(12)
Notes and References	226	(5)
Discussion Questions	231	(2)
Orders and Messages	233	(40)
The Anatomy of Orders	233	(6)
Order Processing Technology: From Q-Codes to FIX	239	(14)
Markup Languages	253	(9)
Representing Rules	262	(7)
Notes and References	269	(2)
Discussion Questions	271	(2)
Systems of Financial Systems	273	(30)
Describing Financial Systems	273	(14)
System Analogies	287	(7)
Characteristics of Systems of Systems	294	(5)
Notes and References	299	(3)
Discussion Questions	302	(1)
Risk	303	(34)
Types of Risk in Financial Systems	303	(6)
Basic Properties of Probabilities	309	(10)
Portfolios and Risk	319	(6)
Risk and Hedging	325	(9)
Notes and References	334	(2)
Discussion Questions	336	(1)
Index	337