As many readers of the Toomre Capital Markets LLC ("TCM") blog may already be aware, the next Hedge Fund Executive Forum Series event entitled Real-Time Decisions & Risk Reduction: Technologies that Reduce Latency and Sharpen Business Intelligence to Drive Results will be held in New York City on Thursday November 29th 2007 and then repeated in Stamford, CT on Tuesday December 4th. Lars Toomre will be one of the speakers at this event. Both Aldon Hynes and Lars Toomre hope that you will be able to join the Incremax and Toomre Capital Markets team at either of these venues.

These Hedge Fund Executive Forum Series events are designed to help key investment decision makers quickly get beyond buzz words and learn which strategic technologies and solutions will help drive the best results from every aspect of their organization -- the front, middle and back-offices as well as client service functions. Designed for investment managers with more than $500 million in assets under management ("AUM"), the focus of this particular event will be on data, input/output ("I/O") and how "push vs. pull" can be implemented.

The key challenge this forum event will address is how to create better real-time decision opportunities that result from first transforming fast-moving data into information and then into knowledge that ultimately adds to economic value. Some of the key solutions and technologies from Advent Software, AMD, Cisco, Microsoft, Reuters and Streambase Systems will be highlighted for further discussion.

Please circle the appropriate date on your calendar and plan on attending. Advanced registration is required and can be completed at this web link. Aldon Hynes and Lars Toomre look forward to speaking with you directly on the 29th or 4th. Hopefully, we will see you then. Please feel free to contact TCM directly if you have any questions or comments.

Late Friday October 12th 2007, The Wall Street Journal was reporting that a number of very large commercial banks, including Citicorp, were looking to set up as much as a $100 billion dollar fund to purchase "shaky" mortgage securities and other suspect investments from their collective non-affiliated Asset-Backed Commercial Paper ("ABCP") conduits, also known as a Structured Investment Vehicles ("SIVs"). In their story entitled Big Banks Push $100 Billion Plan To Avert Crunch, reporters Carrick Mollenkamp, Ian McDonald and Deborah Solomon explain that

The new fund is designed to stave off what Citigroup and others see as a threat to the financial markets world-wide: the danger that dozens of huge bank-affiliated funds will be forced to unload billions of dollars in mortgage-backed securities and other assets, driving down their prices in a fire sale. That could force big write-offs by banks, brokerages and hedge funds that own similar investments and would have to mark them down to the new, lower market prices.

The ultimate fear: If banks need to write down more assets or are forced to take assets onto their books, that could set off a broader credit crunch and hurt the economy. It could make it tough for homeowners and businesses to get loans. Efforts so far by central banks to alleviate the credit crunch that has been roiling markets since the summer haven't fully calmed investors, leading to the extraordinary move to bring together the banks.

As Toomre Capital Markets LLC ("TCM") indicated in a previous note, there is considerable confusion in the Capital Markets community about what this “new” technology called Complex Event Processing is all about. Perhaps more importantly, given the confusion about what the term CEP

actually means, there also is considerable doubt about what is the true value from investing in and fully implementing this new type of middle-ware software. That there is also considerable hard dollar (and associated opportunity) cost in training a staff and then building one or more customized CEP

applications makes the case for Complex Event Processing

technology all the more difficult, especially since the buyer cannot actually “see” the results of purchasing and implementing this new technology.

[Readers interested in visualizing CEP

data may want to more closely look at the software from another TCM client, Fractal:Edge. Developed out of research performed at Cambridge University in the United Kingdom, the Fractal:Edge visualization software is rumored to be actively used in the risk management departments of leading investment banks (such as Goldman Sachs, Morgan Stanley and Citigroup). Using the concept of a circle within a circle within yet further circles (with varying colors and relative circle sizes), the user can interactively drill down through and identify outliers among literally millions of complex records – or to use the parlance of the CEP

world, complex events. One major customer in Brazil uses Fractal:Edge software on a real-time basis with a record set of more than 15 million records! Microsoft Corporation (another TCM client) recently announced that Fractal:Edge has been selected as one of the three finalists for Microsoft’s 2007 ISV/Software Solutions, Innovation Partner of the Year award. Please feel free to contact Lars Toomre for further information on Fractal:Edge.]

Toomre Capital Markets LLC works closely with several of the more prominent Complex Event Processing vendors and some of their leading customers, many of whom are concentrated in what TCM refers to as the Financial Services 300 Focus List. This list of leading financial services organizations is dominated by those firms that have both the capacity to understand and keenly appreciate the value of new or leading technologies as well as the financial resources and willingness to invest in technological leadership. As one might well imagine, this client focus list is dominated by the twenty or so biggest investment banks, many of the largest global hedge and alternative investment funds as well as some of the more progressive traditional investment management companies.

Working together with these Complex Event Processing

vendors, some of their client business unit sponsors and other TCM clients, Toomre Capital Markets LLC has adopted the following definition for Complex Event Processing

that builds upon and further refines some of the other existing definitions for this term:

There is considerable confusion in the Capital Markets community about just what the heck is this thing called “Complex Event Processing

” (“CEP”) and what does it really do. In short, many are having trouble making sense of the fantastic and varied claims that the CEP vendors (and those pretending to have CEP

products) are making. Is CEP

really a new type of application programming or is it just more hype from technologists and marketers trying to sell the next great technological thing?

Recently in their October 2007 issue, John Ecke, Group Publisher of the Financial Technology Group with produces Wall Street & Technology, and his other editors set out to explore further why Complex Event Processing

seems poised for such explosive growth. A recent CEP study by the Aite Group suggests that Capital Market participants will spend nearly $1 billion on Complex Event Processing

by 2010, up from just $50 million in 2006. If this projection is indeed true, the CEP

market is poised to reach a true inflection point and all participants will look back on a traditional “hockey stick” chart of sales growth.

Wall Street & Technology argues that there are several forces contributing to the rapid adoption of CEP

technology. They suggest that the massive surge in data volumes coupled with the need for trade execution speed is the primary driver, but also note that CEP

is being applied in other areas of the Capital Markets industry, like various types of risk management and compliance. Their insert in the October 2007 issue of Wall Street & Technology on the subject of CEP

is intended to further educate and enlighten those who will be hearing far more about Complex Event Processing

in the days to come.

Toomre Capital Markets LLC (“TCM”) firmly believes that there is a central role for CEP

applications in the modern Capital Markets institution and has been working with many of the CEP

technology vendors ever since we discovered the now defunct software vendor called iSpheres in the winter of 2004/2005. Professor Mani Chandy of CalTech was an early academic focused on “sense and response” type of application where users need to respond to tremendous amounts of unpredictable data in all sorts of formats and configurations.

It can be a wonderful things when things come together just right. As an example, I finally got around to upgrading my antiquated cellphone, and I can use my new phone as an MP3 player and a video camera. It makes my life easier and much more fun.

Today, I heard about two other interests of mine converging. This is a much geekier convergence and I’m trying to find out if it too will make my life easier and much more fun. What I’m talking about is the press release announcing Linden Lab Selects StreamBase’s Event Processing Platform To Power Real-Time Analytics And Reporting Throughout the Second Life Grid.

Cool! Will I get to play with that?

The online experience is changing from a world where users pull static text off of webpages to a world were the experience is much more immersive with pictures, videos and three dimensional animations and much more interactive with Web 2.0 functionality, instant messaging and real time data. As these changes take place, information providers need to rethink their online strategies and how they use various tools.

At the center of any information strategy is a good content management system. Drupal is a widely popular open source content management system that facilitates the organization and presentation of information. It allows users of the site to easily add content and has been expanded to include better functionality for images and video. It is this ability to easily be expanded that makes it interesting as more immersive synchronous environments become more popular.

One such environment is Second Life. Second Life has been getting more and more attention as companies explore how they can use to achieve corporate goals. With Second Life, you use a Second Life client, instead of a web browser to access the Second Life servers. These servers provide a three-dimensional real time environment where uses interact with objects that have been created as well as with one another. Second Life has it’s own currency which facilitates micropayments there and there is an active currency exchange to change the Second Life currency, called Linden Dollars, into U.S. dollars.

In the June 5, 2006 edition of BusinessWeek, there is a provocative article written by Steve Hamm entitled “Big Blue Shift.” The thrust of the article is that, under the leadership of Senior Vice President Robert W. Moffat Jr., IBM is reorganizing its 200,000 or so services workforce along skill lines, not just geographically, and coordinating their operations worldwide to deliver services that are better as well as cheaper. This will mean increased staffing in low-cost countries such as India, China, Brazil and Eastern Europe as well as reducing costs in higher-cost countries like North America and Europe.

It is quite a thought provoking article on one method of increasing the productivity of a services business and appears already to be helping IBM increase its profit margins. The key question is whether other large service providers will follow this model. If so, there are likely to many more unhappy Americans who lose relatively high paying jobs to developing countries and the comments like those at the end of this BusinessWeek will rise in intensity. Toomre Capital Markets welcomes the readers’ comments on this portion of the globalization

story.