Waters is proud to bring you a group blog where our editor and reporters can post the latest trends, news analysis and gossip that flows through the halls of today's global investment giants.

Who will be the next Bear Stearns? Which firm will suffer from the whims and misdeeds of a rogue trader? What happens when a trading system goes belly up for a major exchange? Read about it first at the Waters Cooler.

Waters US Reporter Emily Fraser and European Reporter Joel Clark will share the latest findings from trade shows and conferences. As special projects editor, I’ll keep you up-to-date on breakfast briefings and Waters events.

Bookmark Waters Cooler today and make a habit of checking in every morning, at lunch time or before you head home at the end of the day. Waters Cooler aims to be the web’s must-visit blog for lively Financial IT commentary and your comments are most welcome. Check us out.

Phil Albinus
phil.albinus@incisivemedia.com
Special projects editor, Waters

With the Sifma show set for next week -- cue the stifiling NY humidity -- I can see one topic taking center stage. In this stumbling, sluggish economy, investment firms are looking at risk management like never before. The after-shocks of the mortgage meltdown are still being felt and consultants tell us that new risk management systems will be at the top of today's CIO shopping lists.

All well and good but it begs the question: Will these new risk systems be heeded?

The down-sized traders and portfolio managers lost their jobs not just because they lost tons of money but because they ignored the warnings of their risk managers. The relentless pursuit of alpha led them to endorse some very shaky deals. One wonders if the new risk systems should come with a mild yet unignorable Taser to shock the portfolio manager about to disregard the risk warnings.

Zap!

In a report today, The International Energy Agency says an investment of $45 trillion will be needed to prevent energy shortages and cut emission rates by 2030. Whither data centers?

At a recent Waters Street#Grid conference, a speaker mentioned that new mega-data centers under construction had to choose a very special location: next door to hydro-electric dams. Microsoft and Google needed to be near these massive energy plants in order to obtain a steady and near-unlimited supply of power for their mega data centers. Being outside a major city just would not do as power constraints were inevitable.

Something to think about the next time you Google the menu for your favorite take-out restaurant.

Stop by the Waters booth #1304 for a free trial subscription and a tee shirt that is sure to be a collector's item at this year's SIMFA, er SIFMA trade show.

And yes, the error is even more delicious coming from a publishing firm. Enjoy SIM, we mean SIFMA!

I've walked the length and breadth of the rabbit warren that is the SIFMA trade show floor and so far have seen no sign of the new 3G Apple iPhone, announced yesterday -- or any other iPhone for that matter.

Aside from the usual giveaways like frisbees, yo-yos, bouncy balls and pens, both BT and Aleri are giving away ever-so-hard-to-come-by Nintendo Wii's.

One firm just gave away a $500 American Express gift card, but I didn't catch the name over the loud speaker. Fidessa is literally giving away cash -- it's all about finding liquidity...

But the most impressive giveaway so far is from Deutsche Boerse Market Data -- they are raffling off a BMW F 800 ST motorbike. High-speed, low-latency... geddit? It looks fun.

No sign so far of the Davidson Group with their scantily clad women and the open bar, but maybe I missed them. Does anyone actually know what they do apart from throw a lavish party at SIFMA each year?

On a slightly more embarrassing note, owing to an unfortunate case of printer's dyslexia, Waters T-shirts are available at the Incisive Media booth advertising the SIMFA show this year -- rather than SIFMA. I'm going to keep one for posterity.

Wait -- I just walked past a company giving away the new iPhone! Fincad!

More to come...
--Emily Fraser, US Reporter

Microsoft has made an interesting announcement in conjunction with Bloomberg -- subscribers to the Bloomberg terminal can now get access to Bloomberg news, messaging and stock monitoring tools from their Windows Mobile cell phones. Some 250 users are live so far but Bloomberg expects uptake to be huge. Hedge fund managers can keep track of their positions while out of the office visiting investors, and portfolio managers can have one eye on the markets while watching their children's soccer games.

So far it is not possible to trade from the mobile devices though -- so trading from the golf course is still a way off. Compliance departments are too wary of the possibility of excitable employees trading from a bar!

Low latency, sophisticated order routing, and high-performance computing remain top themes of the day.

IBM says it has smashed the petaflop barrier with its Roadrunner hybrid super-computer, which combines a cell broadband engine originally designed for video game platforms such as Sony's Playstation 3 with AMD x86 processors. Good news for data addicts.

With the newly released MarketPulse, BT is bringing voice-over-IP (VOIP) to the trading floor over its Radianz shared market infrastructure, offering the secure connectivity that was missing from VOIP delivered over regular telephone lines. Will this lead to a greater uptake of VOIP on the trading floor?

The coffee is starting to flow as people sit down to rest their feet for a few moments and gear up for the various parties later this evening. Microsoft has a drinks reception in Concourse E from 6pm, Sun and Intel are hosting a reception at the same time and then people will start to head down to the Blue Fin Restaurant for the annual Sungard party. See you there!
--Emily Fraser, US Reporter

Ok so I found them - the Davidsohn Group (with an h) is on the lower level and I discovered that they are in the outsourcing business. The customary semi-naked girls are standing around the bar in black hot-pants and tank tops talking to each other about their boyfriends. (Has any journo received a press release from this company ever? Anyone?--ed.)

The other eye-grabbing outfits on display this year are a group of people dressed in fairy costumes twirling little rubber pigs with wings -- something about pigs flying -- and some other people wearing multi-color tie-dyed T-shirts.

Now I don't THINK he is here for the SIFMA (or SIMFA) show but yesterday evening I saw presidential candidate John McCain and several secret service agents walking through the lobby bar of the Hilton. Good celebrity spot or what?
-- Emily Fraser, US Reporter

I'm a sucker for a good rogue trader story. At a compliance and technology session, one panelist had a terrific anecdote about the rogue trader who masked $7B in losses at SocGen earlier this year. Not only was the young trader very knowledgeable of the bank's middle and back office systems, he had an everyday method of breaking into and manipulating the systems to hide his bad trades.

He used his old passwords!

Instead of cleaning up the password access rules for former techies who have moved on, the SocGen techies allowed their former colleague to have de-facto access to his old systems from his tech days.

Clean up those password files.

This year's Sifma trade show is in its last day and this means the last set of meetings and parties will take place today. While traffic was a little lighter than last year, it was still on the busy side. What were your impressions of Sifma? Waters is all ears.

So it's all over for another year. It was an unusually busy Thursday morning with large numbers of people still roaming around the halls of the show for last-minute meetings -- and to stock up on their year's supply of pens and stress balls.

The main themes that stood out for me this year were -- as ever -- low-latency infrastructures, data and messaging security, high performance computing and a general expansion of functionalities -- for example OMS and EMS vendors are adding options and futures as well as connecting to European venues and other geographies.

What was quite interesting was that Deutsche Boerse and the London Stock Exchange both had exhibition booths -- possibly signaling a trend for a growing number of US firms taking direct market data feeds from foreign exchanges rather than relying on the market data aggregators.

I didn't hear as much about risk management as I expected to. But the main message from the hardware vendors and server virtualization service providers was definitely how to do more with less.

A lot of people are still trying to use the word “green” to sell their products although the link between what they do and environmental conservation is often tenuous at best.

We at Waters hope this year’s show was as successful as it was exhausting for all of you and we hope you have enjoyed the blog. Stay tuned for regular updates!
-- Emily Fraser, US Reporter

Prague. The 'Golden City'; the 'City of 100 Spires'; and next week, for three days only, the Czech capital will play host to SunGard Europa, the software giant's annual conference for the European financial markets.

SunGard has a history of choosing Europe's finest spots for its annual gathering, from the shores of Lake Como in Italy to Barcelona and Paris. This year is no different, but while Prague might be a romantic spot for some time out from the hectic markets, SunGard means business.

Vendor-organised events attract different crowds to the bigger conferences of the year and SunGard Europa is certainly no Sifma or Sibos, but the topics covered are not all that different. The theme this year is 'Complexity, Compliance and Cost,' something that is sure to strike a chord with almost any financial institution in Europe. Everyone here has had to cope with the advent and aftermath of MiFID in the last year and compliance with the regulation has been high on the agenda. Complexity too, is never far away, whether relating to the hefty documents that come from the regulatory bodies, the client contracts that have to be dissected, or most of all, the increasingly complicated financial instruments that are being traded. And underlying everything that financial institutions do in the technology space, especially in these times of economic uncertainty, is cost.

So next week's discussions promise to be interesting and the backdrop of Prague won't be an unwelcome distraction. SunGard has done its best to make its conference more than just a one-vendor display. Speaking alongside CEO Cris Conde and divisional CEO Harold Finders, former Czech Republic president Václav Havel will take the podium in the opening session on Tuesday. A dissident writer who spent some time in jail and then became first president of the Republic after the Velvet Revolution in 1989, 71-year-old Havel is sure to prove a big attraction on Tuesday. Stay tuned.
--Joel Clark, European Reporter

In the state-of-the-art, glass-fronted colossus of London Heathrow's Terminal 5, where I have been stranded for more than five hours and may yet have to wait a good while longer, there is time to reflect on the reliance that we all -- not just traders -- place on technology.

At the risk of telling yet another yawn-inducing story of UK transport delays and British Airways incompetence, I'll cut quickly to the chase. I'm on my way to Prague for SunGard Europa and was due to catch the 0850 flight, giving me a few hours to explore the Czech city before the conference activities begin tonight. Thanks to the wonders of online check-in and express bag drop, I didn't think it would matter too much that a typically lengthy journey on London Underground meant I arrived at Heathrow just 40 minutes before the flight was due to depart. Sadly it was not to be and I butted heads with a grizzly BA official who told me that even if the flight has 40 minutes until take-off, check-in closes at that time and "the systems won’t allow you to be checked in." Ah, the systems.

So, despite all the stories one hears and sees about flights being held, commuters sprinting to meet their flights, aircrafts bundling people on at the last minute, I was delayed this morning by "the systems" which apparently won’t allow me to use the 40 minutes I had in my favour to walk through security and board my flight.

It's hard not to be frustrated by technology at times. It has enabled us to do incredible things. We can buy the most random products and have them shipped right to our door. We can take photos on our phones and send them far away instantaneously. Fund managers can strike buy or sell decisions in timeframes their predecessors can only have dreamt of.

Systems have enabled us massively, but they have also constrained us. To the extent that I can’t be delayed more than a few minutes on my way to the airport without missing my flight. I can’t be notified about the last-minute rescheduling of a meeting without having a BlackBerry. And I can't even know about a friend's birthday party without being on Facebook.

Such questions aside, I do need to be getting to Prague sometime this century. As President Bush prepares to end his 2-day UK visit via Heathrow, there are whisperings of further delays and diversions at the world's busiest airport. Let’s just hope the systems at BA's disposal will allow me to make the 3pm flight to Prague.

Those systems may have let me down this morning, but as I sit waiting in a Terminal 5 café, watching the planes come in to land, life isn’t too dull as I have my laptop in-hand. The irony isn't lost on me.
--Joel Clark, European Reporter

Notwithstanding a 12-hour delay at Heathrow Airport and a fairly late arrival last night, all is well and the sun is shining here in Prague. Behind the shuttered blinds of the Hilton Hotel's conference rooms that is.

It's been an interesting day at SunGard Europa. Among the several conference sessions, which varied from product updates to market and regulatory discussions, one stands out, but probably not for the right reasons. "The financial industry in the post-MiFID era" was the title. Switch off, shut down, don't come back - is the natural and healthy response, but being a sucker for MiFID and a European reporter for Waters, I was duty-bound to attend. I should have known better.

The session (delivered by a prominent European analyst who I will refrain from naming) went through many of the age-old discussions and observations about why MiFID was crafted, when it was introduced, what it has changed... yawn. "MiFID will be an evolution, not a revolution," he proudly proclaimed. Gosh, where have I heard that one before?

Among the small and sleepy audience that sensibly took their seats near the back of the room, I really do hope I wasn't the only one to notice that, for all his erudite observations, the analyst got one thing painfully wrong. The title of his presentation: "MiFID six months on: Where now?" I may not know everything about the European markets, but even I can calculate that MiFID has now been in force for nearly eight months, not six. Perhaps we've all had so much of MiFID that it is starting to erode even basic skills like counting.

More later.

Say what you will about SunGard, but they certainly know how to put on a show. Meticulous planning must have gone into the main evening event at each of the six SunGard Europa conferences to-date. In a well-documented marketing catastrophe at last year's conference, a delightful evening at Italy's Lake Como was somewhat dampened by heavy storms that put paid to the vendor's lavish plans.

Hedging its bets this year, SunGard included branded umbrellas in its conference packs, just in case the dreaded rain should return to thwart the evening plans. But the sun has shone in Prague all day, and a glittering event at the city's magnificent Troja Chateau went off according to plan. Complete with wine tasting, roasted pig, musical performances by Gregorian monks, and a closing spectacle featuring large amounts of fire, there was not a raindrop in sight. From water to fire in one year. Well done SunGard.

SunGard Europa is over, and not even for another year. The mega-vendor is abandoning its annual European conference in favour of a series of ‘City Days’ that will be happening in the main financial centres. So no more sleep-overs for SunGard and its clients, but less time out of the office.

There were some interesting discussions in Prague over the last few days as well as a fair amount of client pampering and entertainment. As at all industry conferences, an overdose of PowerPoint and product demonstrations can become a little wearisome at times. SunGard Europa was no exception and I don’t think I was the only one whose eyes glazed over at various points during the asset management stream.

But there was one presenter in particular that had the small buy-side audience wide awake and almost falling off their chairs. The moment came through a Financial News columnist who took the podium and openly fired seven rounds at the custodian and fund administration industry. Admittedly the audience was mainly composed of SunGard execs and buy-side fund managers who most likely agreed with, or at the very least understood, his complaints. But it must have been a bitter pill to swallow for one man from JPMorgan Worldwide Security Services who was sitting in the front row, particularly as JPM was singled out in many instances as an example of a defective custodian. And even more so as the two men were down to share a cosy panel in the next session.

Here now, courtesy of Mr Richard Greensted, consultant, custodian guru and editor of Scrip Issue, are the biggest faults of which custodians have been guilty.

1. Focusing on assets, not investors
2. Looking for a single global platform to handle everything (it doesn’t exist)
3. Buying (and selling) the wrong businesses (and failing to understand them)
4. Hiring the wrong people (who also don’t understand the business)
5. Missing market trends (or being too late to the game)
6. Following the herd (and not understanding what is actually worthwhile)
7. Pursuing scale not margin (and trying to be good at everything)

Custodians, take heed.

While researching the Indian capital markets for an upcoming trip, I stumbled across a fascinating story of cross-cultural symbology.

The Bombay Stock Exchange recently installed a large bronze statue of a bull--not unlike the one that proudly stands at the bottom end of Manhattan usually being inappropriately molested by teenaged tourists. The bull represents strength and wealth--a bullish market is a prosperous one. Merrill Lynch even has one on its logo.

But in India this new statue didn't go down too well. As many readers will know, the cow is considered a sacred animal in India, and the local media was aghast when the proud statue was erected in front of the bourse. Many commentators--and indeed many of the exchange's brokers--claimed the bull brought bad luck and even blamed it when stocks took a tumble--and let's face it, which market has not seen a certain amount turbulence this year?

The controversy around this statue must have been so bad that the Bombay Stock Exchange saw it necessary to put out a press release begging people to be sensible and not take India back into the dark ages of oppression with their superstitious talk.

"The current ups and down of the SENSEX has nothing to do with the installation of the bull by BSE. As a matter of fact the index movements are an integral part of market characteristics.

In the olden days India was perceived as the land of ‘rope tricks’ and ‘snake charmers’. By indulging into such propagation of a non-scientific theory, we are only trying to re-inforce the age-old cliché of India’s superstitions and backwardness and not the ‘modern’ country, which we are today," said the release.

My favorite line was this: "We request the media not to indulge in the ‘cock and bull’ story !!"
This trip promises to be an education.

(I'm not even going to get into the unfortunate combination of a bovine creature with an institution whose initials are BSE)

I will be visiting Delhi, Mumbai and Bangalore next week and will stop in at the Bombay Stock Exchange for a visit, to find out how they are upgrading their systems to compete with the Indian National Stock Exchange and to cope with a growing demand for algorithmic trading.

I will be blogging the whole thing, so please stay tuned for more updates....

I had always thought people were exaggerating when they said that cows wandered freely through the streets of India. They weren’t. Whether they are chomping thoughtfully through grass—and trash—by the roadside, lounging casually under a tree, or watching with mild interest as groups of skinny construction workers dig up the roads by hand, cows are everywhere.

Delhi is a bustling city of contrasts. There is a lot of construction and development and large shiny malls scream new money. But under the impressive, newly constructed overpass, emaciated bicycle-rickshaw drivers sleep in—or rather on—their shabby vehicles, and whole families spend the night out in the open by the roadside.

The city is hot and dusty and parts of it are very much third world, and yet it is home to some of the IT outsourcing companies that provide the most state-of-the-art IT expertise to the biggest investment banks in the world. What was long considered India’s biggest problem—its booming population—has now become its greatest asset as more and more global financial services firms look to outsource more and more complex functions. The fight for qualified talent goes on and outsourcing firms—as well as global banks’ captive organizations—struggle to retain staff in a market where their skills are so much in demand.

Interesting fact of the day—Indian outsourcing firms have their own offshoring operations in Singapore where labor is cheaper. And so the cycle continues…

Surging data center requirements are set to put huge pressure on a country that already struggles to meet power supply needs.

A report by consulting firm BroadGroup predicts that the Indian data center space will double between now and 2010 as global and domestic demand for Indian IT expands. The report predicts that the data center market will grow to $1.5 billion over the next two years.

However power supply will be a key challenge as energy companies are already stretched. Electricity providers in the capital city of Delhi received 60,000 power complaints in the last fiscal year alone, in a city of over 300,000 power connections, according to local reports.

To be successful in the long term, IT outsourcing firms in India must encourage their employees to care about financial services.

There has long been a challenge in India of getting IT graduates / engineers to care about banking. Traditionally they spend a few years working on Oracle implementations, then they move on to Java. They don't care what the end result is and they don't understand what the end users do with the system once it is completed. What is an interest rate swap? 'Who cares?' they say.

This was fine when firms were just looking to outsource coding and testing of back-office systems to low-cost centers such as India, because requirements we're simpler and project lead times were fairly long, but times have definitely changed. More and more financial services firms are outsourcing development and testing of front and middle-office systems-- which require immediate action and delivery yesterday if possible.

As outsourcers move into the front office--some are now even talking about developing quantitative models for their clients--IT workers are expected to understand the business side of things much more than before.

If a trader has to spend half an hour explaining to his or her IT developer what NPV means, you can bet that relationship won't last very long, says Kedarnath Udiyavar, global head of investment banking products and services at Chennai-based Polaris Software Lab.

Udiyavar also believes that employees who understand the business drivers for the work they do have greater job satisfaction and are more likely to stay with their employers longer.

The dusty-Delhi leg of our trip is complete and it's on to Mumbai this evening for a 24-hour stay.

While many cities in India are known for IT and outsourcing, Mumbai is the country's financial capital. There I will meet with representatives of two Indian financial services firms--ICICI and Motilal Oswal Securities--as well as Merill Lynch, visit the Bombay Stock Exchange and if I get lucky maybe attend a Bollywood party. All in a day's work!

Watch this space for more updates.

Today’s front page headline of the Times of India reads: Exhausted pilots doze off, plane flies past destination.

Apparently an Air India flight from Dubai to Mumbai via Jaipur made it half-way to Goa before the sleepy pilots woke up from their slumber. The Indian daily newspaper reassures its readers that the aircraft could not have collided with other planes as equipment in the cockpit would have sounded a loud warning to either climb or descend, and the machine could not have run out of fuel because planes carry two tons of extra fuel—just in case.

Putting aside the horrifying thought of BOTH pilots being so fatigued they couldn’t keep their eyes open, this story is a sobering reminder of the need for back up, redundancy and risk monitoring tools.

Luckily on this occasion, Air India did have each of these in place and serious harm was avoided. Usually having a co-pilot is sufficient back-up in case the pilot needs a quick kip. But if that backup fails, you’d better hope that some system or other is looking out for unseen dangers such as oncoming aircraft—or in the banking world, a rogue trader extending himself beyond his allowed exposure limits, for example—and that your systems are failover safe and you always have a bit of extra capacity—be it in the fuel tank or the data center.

It is generally accepted around the world that India is a leader in the field of IT. Indian universities churn out computer science graduates like there is no tomorrow and they still struggle to meet demand. And yet that demand is generally coming from overseas. For over a decade—and especially since Y2K—Western firms have looked to India as an outsourcing destination, thanks to its well-qualified and relatively cheap IT personnel.

But until recently, many Indian firms have preferred to keep their business processes fairly manual, as employees--even in large numbers--generally come cheaper than the IT systems that might replace them. This was in evidence in our hotel in Delhi, where the staff far outnumbered the guests. At one time I counted no less than 9 overly helpful receptionists crammed in behind a desk with 2 phones and a single computer. They must have been incredibly bored--or just very good friends. As long as wages are cheap, firms can afford to have a surplus of employees.

A preference for the manual had been the norm in Indian brokerage firms too, but this has been changing since the nation’s two exchanges National Stock Exchange of India and the historic Bombay Stock Exchange went electronic, and foreign investors started eyeing opportunities.

And now the country is opening its doors to direct market access and algorithmic trading—for more on this see the next issue of Waters—automation and electronic trading are absolutely front of mind for domestic firms. According to various domestic brokers, India is on the cusp of a major boom in financial IT.

As with many developing nations, India has enjoyed a quick game of leapfrog over its developed world counterparts when it comes to technology. For example, fixed telephone lines are there, but play a dramatic second fiddle to wireless networks, which are excellent. I have better reception on my American cell phone in India than I have ever had in New York. I didn’t know you could get 5 bars on there!

In much the same way, most Indian financial services firms never invested in mainframes and therefore have far fewer legacy maintenance issues than firms in the US or Europe. Firms in India have always preferred open source technology to paying large license fees to firms like Microsoft or IBM.

Ajit Karunkaran from California-based grid vendor Gemstone Systems says this makes the industry primed for the adoption of grid computing, which he says is set to take off in the next 12-24 months. At the moment, grid technology is only being used in Indian research institutions, but once firms understand the benefit of performing multiple complex calculations in parallel--an on cheap commodity boxes--he believes uptake will be fast. The technology has already matured in the West, so just like with the wireless revolution, the lessons learned there will be easily transferred to the later adopters.

The same goes for algorithmic trading and all the low-latency infrastructure and throughput requirements that come with it. Indian firms will have a much faster learning period than US firms that pioneered the way.

Mumbai went by in a bit of a blur—lots of people to see and only 24 hours—and we are now in Bangalore. This is definitely my favorite city so far. It is the Silicon Valley of India—home to a multitude of technology and outsourcing companies. There is a lot of money around and the streets are cleaner and better maintained. Definitely fewer cows.

Mumbai was huge—a very vibrant city—and we could have done with an extra day or two to do it justice. Getting around was particularly difficult. I sat in traffic for 2 hours yesterday morning, in a local taxi with no air conditioning and leopard-print fabric seat covers. Big mistake. A word to the wise—always get a car with A/C when traveling in India.

Stay tuned for more coverage...

Whilst in no way wishing to steal the limelight from colleague Emily Fraser, whose excellent roving posts from the Financial IT hubs of India can be read below, I want to update briefly on some interesting news that has hit the London market today.

Baikal. Ever heard of it? No, neither had I until this morning. Baikal is the deepest lake in the world and the largest freshwater lake in the world by volume. It is located in Southern Siberia, Russia and spans 1,637 meters (5,371 feet), holding roughly 20 percent of the world's total surface fresh water. According to Wikipedia, it is home to 1,700 species of plants and animals and was declared a UNESCO world heritage site in 1996.

Right, geography lesson over; what on earth does Baikal have to do with trading technology? Well, aside from being a unique natural feature, Baikal is also set to roll regularly off the tongues of European equity traders in the very near future, along with other odd terms like Turquoise, BATS and Chi-X. Yes, Baikal is yet another European trading venue, announced today as a joint venture between Lehman Brothers and the London Stock Exchange (LSE). It will operate as a non-displayed platform, or dark pool, offering users total anonymity on a pre-trade basis.

Baikal is the latest sign that the LSE, which has historically held a monopoly over the trading of UK-listed stocks, is serious about battling the new-found competition in Europe. With the proliferation of non-displayed trading venues and multi-lateral trading facilities that are undercutting the exchange on prices and speed, the LSE can't afford to put its head in the sand. By partnering with Lehman - one of the few top-tier investment banks that held off from investing in arch rival Turquoise, but which is a formidable equities broker - the LSE will be hoping that it can better compete with the new execution venues and maintain the business of high-speed algorithmic traders.

Baikal will be chaired by the LSE's CEO Dame Clara Furse. "Baikal provides an exciting opportunity for the market to transact certain types of business in European equities with the confidence of total pre-trade anonymity," said Furse in today's statement. Full details on how Baikal will differentiate itself are still to emerge but, barring regulatory and other hurdles, it is aiming to launch in Q1 2009.

Ladies and Gentlemen, welcome to Baikal. And full marks to the marketing teams at the LSE and Lehman Brothers for the clever slogan. They'd better hope it gathers as much liquidity as its namesake.

Bangalore is cleaner and more developed than Mumbai or Delhi, but the city's streets seem positively shabby when you enter Electronics City.

Electronics City in Bangalore is home to many of the major technology firms, such as HP, Wipro, Infosys as well as a number of Indian firms I had not heard of. Within the compound, Infosys has a gated and wonderfully landscaped and architected 80-acre complex with 20,000 employees. With a similar number of employees, Wipro has an entire avenue all to itself.

Facing industry attrition rates that go well into the double digits, these firms go all out to create an attractive place to work. Ongoing training is mandatory and ensures that employees have domain expertise. The Infosys campus, for example, boasts a swimming pool, a golf course, basketball and volleyball courts, as well as several food courts and free gyms, and several hundred company bicycles are located all over the complex so staff can get quickly from one meeting to another. It was like we had stepped out of India for a moment into some futuristic other dimension. When you leave the gates though, India is still waiting, in all its colorful glory.

And so, my whirlwind tour of India has come to an end. I hope you have enjoyed reading the blog and that you continue to do so and post comments. It has been good to get an inside view into the local capital markets and how technology is helping them mature, as well as to speak with a number of the major outsourcing companies and learn how they have had to change their business models as their cost arbitrage advantage has dwindled. I will be going into these trends in detail in a series of upcoming reports in Waters. Until then, namaste.