Nerds on Wall Street: Math, Machines, and Wired Markets

7.11. Vapor No More

MarketMind was unadulterated vaporware in 1987. By 1992, as incorporated in QuantEx, all of the design goals were fully realized. Much of its success is due to a near-seamless integration with the information environment in which it works, from market data to execution channels.

There is only a little AI here. It is used to bury complexity and provide relief for the information overload produced by modern market systems. It provides technological leverage for more traditional and quantitative techniques. It is not used to "emulate great thinkers" or make momentous discoveries. It does, however, provide a real and substantial advantage over previous technologies. Traders using these systems can work in ways that were impossible without them. They have a new set of tools to use in the efficient implementation of investment ideas.

Jefferies' Investment Technology Group, which created the POSIT crossing network in 1987, developed QuantEx with Integrated Analytics in 1990–1991, and acquired the whole company in 1992. It has been a resounding business success. ITG went public in April 1994, with an initial market capitalization of $230 million, rising to over $2 billion today.

As in many acquisitions, particularly those combining companies of very different flavors, like a large, established New York brokerage made up of guys who wore suits to work and a small, scrappy West Coast start-up with nerds in Birkenstocks, there were cultural issues. Some of the Birkenstock ...