Collective Intelligence in Finance: Your Guide to Participating in Challenge Driven Innovation

Equeum
Equeum
Oct 7, 2019 · 7 min read

Open markets provide a rich landscape for innovation by building on the best ideas produced by a community. Decentralized networks replace top-down product development with collective intelligence directed at a wicked problem: an open ecosystem means benefiting from the creativity of a global talent pool, with individuals bringing unique experiences and perspectives to the solution.

Capital markets research has been dipping its toes into leveraging the power of the crowd in a quest for a more efficient innovation strategy: from research aggregation to alpha generation, prediction tournaments, open source projects, learning platforms, and more, industry titans and startups alike have been seeking the best way to integrate the heavy security demands of financial services with the innovative potential of open communities.

Every flavor of open network opens participants to something a little different. While community led projects range from offering learning opportunities to intellectual challenges or even workplace enablement, many also offer resources for the consumption of their communities to incent participation. Other projects act as a hub for low-filter research aggregation, or try to enter symbiosis with developers by offering otherwise rare data under a freemium model with a monetization strategy for commercial endeavors.

These ten platforms leverage collective intelligence to drive results in capital markets research in different ways. Whether you’re looking to learn a skill, develop a trading strategy for personal use, compete against the best and brightest, or market a product, open markets can provide a way to engage with a space that is otherwise hard to enter.

Industry Projects

Seeking Alpha

What is it: Crowd-sourced market research

What does it offer:

  • Market research
  • Paid access to private communities with investor focus

Cost of participation: Free (Premium account for minimum $19.99/month)

Seeking Alpha is a crowd-sourced content service for financial markets, connecting millions of investors to share ideas and make informed investment decisions. Articles and research published in the community cover a broad range of stocks, asset classes, ETFs and investment strategies. Investment theses undergo rigorous editorial reviews, ensuring the highest quality standards. In contrast to other equity research platforms, insight is provided by the contributor base of investors and industry experts rather than the sell side, and more than 10,000 investing ideas are published each month. Through crowdsourcing, Seeking Alpha allows people to connect and share ideas, news, debate amongst themselves, and make better informed investing decisions. Advanced charting, data visualizations, and technical and fundamental analysis add clarity and enable informed, data-driven decision-making.

Open Calais

What is it: A RESTful API for named entity recognition and semantic mapping of unstructured data

What does it offer:

  • A limited free tier to the Refinitiv Intelligent Tagging API
  • Extraction of entities [companies and people] and relations [events like IPOs, product recalls, or reorganizations]
  • Classification into industries, topics, and social tags with relevance scoring

Cost of participation:

  • For free, users can get a “free-to-experiment model” to begin API integration
  • Users must pay for a fully managed model, in-house model, or an environment in their own Azure account

Open Calais is a free tier of the Intelligent Tagging API, which turns unstructured data into intelligent information by automatically creating rich semantic metadata for news articles, research, emails, and other unstructured text formats. Within a second, Calais can analyze documents to find the entities within it, as well as facts and events that might be hidden within the text. Information is extracted in RDF triples, and can be integrated into sentiment based systematic trading strategies making it a great tool for the novice financial software engineer.

FINOS

What is it: Industry-organized collective

What does it offer: Resources and organizational structure for applications geared to technology enablement in financial services.

Cost of participation: Fee for membership benefits

FINOS is a non profit organization that provides an independent setting to deliver software and standards that address common industry challenges and drive innovation. Participants develop open source solutions with the intent of fostering collaborative culture, increasing system interoperability, and lowering costs of integration among disparate legacy systems. Unlike most projects on this list, FINOS is explicitly geared to enabling knowledge workers in financial services, and moving the industry forward: projects are developed collaboratively by representatives of various stakeholders under a strict governance structure.

Community Projects

FirmAI

What is it: Crowdsourced code repository

What does it offer: Free business intelligence tools for research, data analysis, and other domain specific applications.

Cost of participation: Free

FirmAI is a repository of experimental business intelligence tools (BITs) developed as independent projects by members of GitHub. While most BITs are used in corporate and enterprise settings, FirmAI seeks to develop an offering at a capability and price point accessible to small businesses. Derek Snow of FirmAI is changing the world by offering intelligent business automation to anyone willing to spend some time figuring things out. The website also offers a wealth of knowledge, tutorials, examples and tooling, making it a great starting point to learn practical data science.

QuantConnect

What is it: Research and monetization platform

What does it offer:

  • Resources to develop algorithms, as well as a platform to market, run, and monetize the end product
  • Participants develop algorithmic trading systems using data provided through the platform
  • LEAN — python package
  • Monetization via algo licensing

Cost of participation: Free

QuantConnect is an open-source, cloud-based algorithmic trading platform for equities, FX, futures, options, derivatives and cryptocurrencies. It enables the quick design of algorithmic trading systems by providing market data and a cluster computer directly to engineers around the world. Anyone can create a live trading algorithm for personal use, or for licensing to the platform’s base of interested buy side firms and investors. While algorithms often need to demonstrate over three months of history for consideration, making it poorly suited to commercial activity, QuantConnect is a well resourced community that can provide participants with a great learning experience.

OpenQuants

What is it: Educational website

What does it offer: Education in quantitative analysis, including resources for financial data science, usage of alternative data, and practical methodology.

Cost of participation: Free or minimum $5/month on Patreon

OpenQuants.com creates free, reproducible and open-source quantitative research in financial data science and alternative data including articles, interviews, and a live, open book. They emphasize openness and reproducibility, and work towards opening access to the resources and skill sets required in modern quantitative modelling. Some articles and interviews are free, but other features are available only to supporters on Patreon. Their Open Quant Live Book initiative is open to co-authors and contributors, and aims to be an introduction to the most important aspects of financial data analysis, algo trading, portfolio selection, econophysics, and machine learning in finance.

Quantocracy

What is it: Research feed

What does it offer: Curated mashup of quant blogs

Cost of participation: Free

Quantocracy is an organized mashup of blogs on the topic of quantitative and empirical trading. The site is the number one source of new readers for most blogs on their mashup, while offering subscribers a one stop shop for trending research and industry news.

Alternative Hedge Funds

Numerai

What is it: Prediction tournament

What does it offer: Participants solve machine learning problems as part of a network wide prediction challenge

Cost of participation: Free (potential to be paid)

Numerai hosts a weekly data science tournament to direct its hedge fund activity. Participants aim to generate predictions for an un-released validation set, and with the most successful entries earning payouts in NMR, the platform’s utility token. Data scientists work with clean, structured, and obfuscated data, turning the tournament into a difficult feature engineering problem. The best models are incorporated into the Numerai meta-model, which is traded by the fund directly. Numerai has paid out just shy of $8M to its network to date.

WorldQuant

What is it: Alternative hedge fund

What does it offer: Investment services and competitions

Cost of participation: No fee to participate in the competition

WorldQuant is an international hedge fund and quantitative investment management firm that gives people the opportunity to learn about quantitative finance and compete in their WorldQuant challenge. This year-round competition allows contestants to use the WebSim platform to create algorithmic alphas. WorldQuant opens up internal data to infinite numbers of independent contributors and has even launched their own independent portfolio manager platform.

Quantopian

What is it: Alternative hedge fund

What does it offer: In addition to a hosted tournament, Quantopian offers educational tools and open source packages.

Cost of participation: Free

Quantopian is crowd-sourced hedge fund that allows novice quantitative analysts to test and develop trading algorithms. They also provide data, education, and a research environment to their users, and the opportunity to be paid for algorithms that fit a particular investment profile.

Unlocking the potential of collective intelligence and open data in capital markets is a problem that gets solved along multiple fronts. In addition to offering a data-enriched research environment and providing the infrastructure to support development without labor duplication, platform stewards need to solve the relatively harder problem of creatively solving for good challenge definition, incentive alignment, and skill development in order to bootstrap the formation of a healthy ecosystem. Explore the communities and offerings above for an introduction to quantitative trading and the existing landscape, and let us know what you think! Where does collective intelligence fit in the capital markets research landscape?

Equeum is the platform enabling collective intelligence in capital markets research. We are bringing together data owners, developers, and asset managers to re-imagine the supply chain fueling Wall Street. Visit us here to join the mission- we’re eager to have you be a part of the journey.

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