Kairos Asset Management Adds Futures Strategies to StreamBase CEP Platform

Kairos Asset Management (KAM), a Sao Paulo, Brazil-based company, with US$100 million under management, has confirmed its commitment to the StreamBase complex event processing (CEP) platform by adding futures strategies to the high frequency equities trading strategies it already runs on the platform (see its earlier deployment here).

Set up in 2003 by traders leaving several large Brazilian financial institutions, KAM considered both StreamBase and Progress Apama platforms before selecting and deploying a StreamBase solution last summer. At the time, there were no benchmarks for CEP platforms in the Brazilian market. Alberto Araujo, chief operating officer at KAM, explains: “We spent six months developing a proof of concept with the Apama platform. Then we looked at StreamBase and the proof of concept took two weeks. StreamBase was the best choice for speed of strategy development and we have also been pleasantly surprised by the reliability of the platform.”

He continues: “Initially, we used the StreamBase platform for algo development and order execution in equities. After our first strategies were implemented and in production we started to understand the potential that StreamBase offered for trading multiple asset classes. Now, in addition to equities, we have StreamBase running strategies for futures.”

The company claims ‘outstanding results’ for its first few weeks running futures strategies on StreamBase. “Futures are more sensitive than stocks and we need to be the first to arbitrage in the futures market in Brazil – the fastest to send an order, the first to fill the order and then we can take the arbitrage profit. Being second usually means a loss. So far, using StreamBase we have been able to be first.”

KAM uses StreamBase as the basis of its trading systems in Brazil and the US, although it expects to expand the platform into other countries where it executes trades, such as Mexico and Chile, and then beyond existing territories into markets across Europe and South Africa. “We want to add more countries and different asset classes to our portfolio and to the StreamBase platform, but we need to wait for some markets such as Mexico to catch up with the kind of trading environments we have in Brazil and the US,” says Araujo.

As well as being an early adopter of CEP in Brazil, KAM was one of the first market participants to collocate a server for derivatives trading at BM&F, part of the BM&FBovespa exchange, when Brazil relaxed its rules last year. Araujo does not boast about KAM’s technology leadership in he market and says only that the company is ‘the benchmark for all those interested in high frequency trading’ in Brazil.

For KAM, the StreamBase platform has extended the strategy beyond the core of trading cross border arbitrage and has provided a base on which to develop new strategies besides arbitrage investments. For StreamBase, KAM is a good catch, a pioneering technology adopter and the company’s first client among a handful in Brazil to run strategies for futures on the CEP platform.

Richard Tibbetts, chief technology officer at StreamBase, says: “Firms that want to expand their trading desks to other asset classes may find themselves spending significant time and effort solving technical challenges, such as normalisation, data analysis and connectivity issues. StreamBase’s whiteboard programming, combined with connectivity and visualisation options, accelerates time to market.”

Detailing the case of KAM, Tibbetts says: “It used to take KAM about 10 weeks to put in a new strategy, but with our tools and KAM’s expertise it can now be done in two weeks. They think about the algos and markets, and we take care of the software.”

StreamBase’s early success with its asset class agnostic technology platform was in Canada and it has since gained ground in the US and Europe. Looking forward, Tibbetts sees Brazil as a potential growth market, but says the company will be led by customers in terms of where it will concentrate next.