A trust problem in quant finance?

Over the past two decades, quantitative trading has achieved predominance in the financial service industry, with experts estimating that quantitative models now drive approximately 80% of today's trade volume. As a result, a sub-industry has emerged that consists of research firms and hedge funds who analyze market data, fundamental data, and alternative data sources using mathematical models that attempt to predict the direction of future price movements. The results of these models are called signal or investment intelligence.

The problem

There is a typical trust problem in quantitative investing: anyone can create a model that perfectly fits the curves ex-post, which will not work ex-ante. This curve-fitting problem produces a trust problem, i.e., the model has worked in the past (delivered alpha) but may not work in the future.

How SYGNAL creates immutable trust

SYGNAL solves this trust problem by collecting trading signal data in real-time and applying hashing and blockchain technology to create a permanent audit trail.

1. We collect, hash, and store quantitative signal data
2. We make it immutable by publishing hashed data* onto the Ethereum blockchain
3. We provide tools (web & API) to end users to verify and audit quantitative data

By publishing quantitative data onto the Ethereum blockchain, SYGNAL proves that investment models are accurate & trustworthy.

*raw data is not published on-chain and can only be accessed locally by authorized users

Our solutions benefit

Traders

Having an immutable audit trail means that traders can trust the information on which they base their investment decisions: the data has not been curve-fitted or manipulated in any way.

Because SYGNAL systematically hashes all data entering the platform and publishes it onto the Ethereum blockchain, we build an immutable track record for every quantitative model. The platform additionally calculates the model's respective KPIs. Therefore, the process allows end-users to continuously evaluate a signal model's past performance while trusting that the historical data is accurate and not curve-fitted.

Quantitative managers

By sending data to SYGNAL, quantitative investment firms can use our technology to establish a verifiable and immutable track record for their R&D, Fund, and historical performance. Using this tool serves to establish trust with potential investors, improve sales processes, and reduce third-party auditing and regulatory compliance costs.

SYGNAL's auditing services are also available to quant managers interested in the tools but do not want to resell their investment intelligence on the SYGNAL platform. Managers can deliver data in an encrypted format so that the raw data remains private. In such cases, the auditing service is not publicly available to all end-users but only to users to whom the manager grants access.

Why use SYGNAL

Traditional auditing services typically cost thousands of euros and are handled manually. SYGNAL automates the auditing process for a fraction of the cost of large auditing firms.

If you are interested in learning more, or to request a quote, please contact us: sales@sygnal.ai