R & D

Duli Finance Advisory (DFA) performs research and development activities for the advancement of methods and technologies applied to finance and its related fields. DFA's R&D objective is to advance understanding in areas of finance to ultimately apply such knowledge to better-inform our clients, and to develop finance and technology processes, products and solutions that maximise our clients' gains while minimising their exposure to risk.

our R&D activities

STRATEGY RESEARCH AND TESTING

Strategies for higher financial returns are always evolving. These may include methods such as arbitrage, interest rate switching (where lower-yield products are switched into higher-yield products within the same risk class), and others. 

We research possible strategies in both regulated and unregulated markets to determine the levels of returns and risks associated with entering such transactions. 

FINANCIAL PLATFORM ASSET MOVEMENT TESTING 

Exchanges and other financial platforms are growing at a fast pace. These platforms facilitate the transaction of large sums of money and enable entry into various markets and products. 

We research and occasionally live test such platforms to assess the levels of risk they may pose, including access to deposited funds and the transfer of funds between platforms.  

ELECTRONIC TRADING LIQUIDITY AND GAIN OPTIMIZATION 

The application of electronic trading, such as algorithmic trading, is purported to have widespread use in equity markets and gathering pace in other markets (see BIS 2018, page 14, Box B, paragraph 4); with its use primarily in order placement solutions (see BIS 2018, page 3, Section 2.1). However, research is lacking in other aspects of electronic trading, especially with regard to its capabilities to contribute to liquidity and maximise gains for their users. 

We are currently performing research to determine how well electronic trading systems that apply algorithmic trading approaches perform in providing liquidity and generating gains in financial markets. The research focuses on traded financial instruments on regulated and unregulated exchanges with the view  to determining performance during volatile and less volatile market conditions. Ultimately this research will be applied to develop algorithm based systems that have the ability to: 

• contribute to liquidity in financial markets,

• maximise gains, and; 

• minimise losses. 

MAXIMISING FINANCIAL RETURNS

In current market conditions, the search for low risk and high gain products has become a difficult practice. At DFA, we search for innovative ways to provide solutions that will maximize returns, while reducing risk virtually to near zero.

APPLICATION OF AI & MACHINE LEARNING TRADING METHODS IN FINANCIAL MARKETS 

Systems that implement artificial intelligence (AI) using the machine learning approach are beginning to find applications in financial markets. 

DFA is conducting research to determine how well machine learning can be applied to recognize time series patterns. The objective of this research is to determine if it is economically and technologically feasible to apply pattern recognition processes to real-time financial market environments.

 NEW RISK MANAGEMENT METHODS & METRICS

Methods and processes that are part of a reporting framework applied to monitor financial performance tend to have a lesser level of operational scrutiny and control, especially when compared to the processes they monitor. Such a reporting framework would be the financial accounting system, where processes and methods are applied for the preparation of financial statements and tax calculations.

DFA is researching into the development and application of metrics that have the potential to monitor such reporting frameworks from the perspective of information quality. The findings from this research will be used to develop metrics to inform investors of potential risk to financial information quality.

ELECTRONIC TRADING RISK MANAGEMENT CONTROLS

Policies that address electronic trading environments are being put in place (for example, see PRA 2018, BIS 2018) with the need for effective controls to ensure that such policies are properly applied. It is uncertain whether prevailing model validation and model audit review methods are capable of providing assurance that application of an electronic trading system is within the parameters for its intended use, and is functioning within the expected boundaries of its use (see BIS 2018, page 14, Box B, last paragraph  7). 

In the presence of this uncertainly, DFA is examining preventative and detective controls that have the potential to be applied to ensure proper functioning of electronic-based trading systems. Such controls are intended to augment or supersede current model validation and model audit approaches applied for electronic-based trading systems.