An Open-Source Audit: Where Financial Firms Are Turning to Open Source

I had the opportunity to speak to several end-users for a feature in the April issue of Waters about their thoughts on open source. The majority on both the buy side and the sell side were positive about the potential available from developing applications and platforms using open source.

The feature, which will go live the first week in April, touches on the biggest things to consider when implementing open source, areas where firms struggle with using open source and where the community still needs to grow.

What about real-world applications of open-source software? Below, three firms—an investment bank, an exchange and an asset manager—describe areas they are most interested in when it comes to open source and/or where they are implementing open-source software.

BNY Mellon

John Weir, head of BNY Mellon's application platform and services (APS) group, sees four major categories where open source is trending in financial services.

The first is the user-interface space. Weir says most web applications are written in JavaScript, and there is a huge community with constant, fast-moving development in the space.

Big data is also a popular space for open source, Weir says, with Apache Hadoop driving a good portion of the work done in an area traditionally owned by vendors. Weir specifically cited strong use of the R programming language among data scientists, adding that there is a huge community of university professors maintaining and taking that library forward extensively.

The middleware space, which is Weir's focus at the New York-based bank, is also a prime candidate for open source. Weir says he sees it most present across infrastructure-as-a-service and platforms-as-a-service. Specifically, Weir cites Docker (containerization application), Apache Mesos (cluster management) and Kubernetes (automated deployment, operations and scaling of containerized applications) as areas of interest.

Finally, Weir points to the actual code libraries—JavaScript and Python—as areas that continue to see growth and activity.

BNY Mellon is hoping to take some of the things it has built and move them into open source. The issue—as is the case with many large financial firms looking to do the same—is licensing. "The challenges there are really still mostly corporate legal," Weir says. "At the end of the day, you're interested in making sure that you haven't violated anyone's IP rights."

LedgerX

Zach Dexter, CTO at LedgerX, is well-versed in the open-source space as the bitcoin exchange and clearinghouse was built from scratch using only open-source and in-house code.

Unsurprisingly, Dexter's focus in the open-source community is a major concern of his firm's day-to-day operations: network communications. According to Dexter, connectivity methods to exchanges, like IBM's MQ, are outdated.

LedgerX has an open-source protocol with its front-end software called efficient financial messaging (EFM) that was developed internally and released on GitHub. By offering EFM on open source, users can modify the software used to connect to LedgerX.

"If you're a participant of LedgerX and you want to change the way you handle incoming messages and send trades, no problem. You can make that change using one developer on your own serves and then submit that patch back upstream in a process called continuous integration," Dexter says. "So that is a big plus for us: The ability of our customers to use continuous integration to constantly be integrating changes to our software into the master copy of that software so that other people can benefit from it."

Northern Trust

There is a bit of excitement in Len Hardy's voice as he rattles off the different projects the Chicago-based asset manager is working on in the open-source space.

The first item Northern Trust's director of architecture and innovation brings up is the firm's enterprise data platform (EDP). The core of the EDP is a data reservoir that is built on the Cloudera Hadoop platform, helping the EDP to become the delivery vehicle for all reporting and data to corporate clients.

Hardy says the firm also has eyes on the development environment space. Apache Tomcat, an open-source application service, and Docker are two specific projects he cites.

Pandora, a real-time monitoring tool overseeing applications and infrastructure that gives early warnings when there might be potential issues all via dashboard, has already been implemented, according to Hardy.