Lodestone – Capital Markets Open Source Project


Banks spend far too much time and resource continually ‘re-implementing’ proprietary infrastructure and plumbing, that doesn’t deliver innovation, or differentiation to clients.

Finance is no stranger to using open source, and now ‘The mighty’ Deutsche Bank (always the visionary), is throwing its weight and talent behind a new Capital Markets Open Source initiative in the form of Lodestone Open Source Foundation.

The principles being:

  1. Contribution of quality code should be valued above all else
  2. No control or manipulation by membership donations
  3. Longer term return of value is more important than short-term project needs
  4. Encourage federation of trust and community
  5. Inspire the community via leadership rather than management
  6. Engage in common beneficial efforts with other industries

The big guns from Deutsche Bank talk about the foundation here in a promo video: watch it all it’s great

Zar Amrolia, Global Head of FX at Deutsche Bank

This will be a significant competitive advantage to Deutsche Bank, if we are as helpful as possible. The board (of Lodestone), and the open source community will want to show the rest of our industry the advantages of helping them. Competitors outside, will be left standing still……

Dirk Ward, Head of Product Management, FX eCommerce (5-13mins)

Deutsche has been #1 in Global FX for past 8yrs.  In those same 8yrs, FaceBook has gone from zero to three times the market cap of all of Deutsche Bank, with 1/10th of the tech dev staff of Deutsche bank – through aggressive use of open source.

Great pancake analogies – competitive di-advantages of hiring top tech teams from your major competitors. They always want to re-build everything ‘their way’, before starting to innovate!

That’s why FX spot liquidity windows tend to look the same, as the same top tech teams move bank to bank re-building them – resulting in huge increase in code base to support.

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Schematic of some of the components that Lodestone could undertake to build: link here

An interesting blog comment on the focus for Lodestone:

Code The Markets Full blog here:

My rates etrading background suggests the ECN gateway space as a fruitful one to address. Here there’s an incumbent vendor, ION Trading, with a successful suite of rates etrading software. ION’s suite includes the MarketView gateways that present the same API to all the fixed income ECNs: Bloomberg, Tradeweb, BondVision, MTS, BrokerTec, eSpeed etc.

Almost all the leading rates dealers use them. In my experience almost all the leading rates dealers see them as an irksome recurring cost.

An IB led OSS consortium like Lodestone could develop open source ECN gateways, sharing the cost of development including ECN test system and API access, and freeing themselves from ION’s license fees. They’d also gain more control: one frequent IB complaint is that new features requested from ION become available to all their competitors a few months later, when they’re rolled into the main codebase.

5 Responses

  1. “That’s why FX spot liquidity windows tend to look the same, as the same top tech teams move bank to bank re-building them” – perhaps the “Head of Product Management” should accept some responsibility?

  2. Hi Nully. Evidently, I didn’t make it as clear as I should have that I do accept responsibility for the vast waste and lack of real progress in our industry. In the video I tried to explain, via the pancake analogy, exactly how i am responsible. I worked in DB in eCommerce during the tech boom, and started and ran Volbroker from 2000-2002. I have to admit I didn’t see the pattern back then. After seven years doing other things, I came back to DB three years ago, and I’ve found the situation as I describe here very frustrating since then. I started talking openly with people outside DB about how to change this only very recently, and shortly thereafter, Olivier Deheurles, Martin Thompson and I started working on what’s now the Lodestone Foundation. I’d welcome any suggestions for change you may have, and I would be pleased to get you involved. You can reach me at dirk.ward@db.com

    • Hello Dirk,
      I enjoyed your pancake analogy as I’m probably the worst that there is on insisting on having a proper kitchen, rather than getting straight to the point. The Loadstone looks promising if as you say, you get it right the first time. I’m looking forwards to seeing how things progress.

  3. […] designs. Open-source airplanes also seem to be a logical development. Financial institutions see a growing demand for shared, open-source solutions. The arms industry is strongly interested in the benefits of open […]

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