Virtual reality takes fund managers into cyberspace

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The Independent Online
VIRTUAL reality allows people to enter a three-dimensional computer-generated world - or cyberspace. So far, it has been most widely used for military and aerospace training, allowing soldiers to 'experience' being under attack in the Kuwaiti desert before Operation Desert Storm, for example. However, applications are spreading, and have now reached Wall Street. Financial advisers may soon be visualising your portfolio in a financial cyberspace.

Fund managers covering numerous stocks or bonds across a variety of countries face a bewildering amount of information. VR can provide a different way of analysing this data, using 3D techniques to spot arbitrage opportunities or groups of stocks behaving oddly.

Maxus Systems International, a software company and fund manager based in New York, has developed Metaphor Mixer, one of the first VR applications to manage financial portfolios using live market information.

Metaphor Mixer divides the computer screen into squares like a chess board, with countries down the side and industry groups along the top. Within the 'London pharmaceuticals' square, for instance, each stock is identified by a poker chip, with the company logo embossed on it. The chip will be a triangle, square or pentagon, depending on the company's market capitalisation.

'Flying into' any square using a spaceball (like a 3D mouse), the user sees a three- dimensional image of that market sector. The height of each company above the plane gives its percentage change that day, and the colour of the chips changes with their height.

The chips may blink or spin according to pre-set criteria such as volatility, earnings, p/e ratios, and short selling. There is also an arrow vector attached to each chip, which rotates as the stock moves relative to its trend or chart points.

Finally, there is the automatic pilot or artificial intelligence, which looks like a spinning asteroid and can fly around the board by itself or with the human user. It can search for any attributes the user assigns.

Metaphor Mixer was designed using the WorldToolKit virtual reality development system built by Sense8 in California. Maxus is licensing it to trading houses as well as using it to spot arbitrage opportunities for its own funds.

Ben Delaney, publisher of CyberEdge Journal, which tracks the virtual reality business internationally, says that VR is likely to spread throughout the financial markets. 'The brain is wired to look for visual exceptions, and VR is the natural way to do that.'

One of the companies using Metaphor Mixer is ABD Securities, the New York trading arm of Dresdner Bank. George Gabriel, vice-president of foreign equity trading, uses it to help decide hedging strategies in the derivatives markets.

'The more data you need to crunch, the better this system becomes. I really think the benefits will be greatest for the fund manager focusing on half a dozen or more markets. It will just give you an edge because right away you can visually identify markets where there has been a lot of movement overnight, for example.'

(Photograph omitted)