Pioneering a Free Market for Alpha
The financial community espouses the benefits of an open, free market, yet when it comes to incentivizing alpha, the rewards are obfuscated and bonuses are often discretionary. Today, performance in quantitative finance is black and white — measured in hard numbers and deterministic. The pricing model must be better defined.
Fast, open, and transparent markets are the best mechanism for setting a fair price for goods. Yet, why has no such market existed for alpha? Traditionally, the difficulty of comparing strategies, combined with the lack of an independent third party for securely hosting and reviewing alpha, made the interchange impossible.
With the rise of cloud computing, crowd-sourcing, and decentralized talent, ideas now compete on a global stage. All that was missing was a marketplace for them to be listed and to attract the attention of institutional capital. That’s where we come in.
In 2018, QuantConnect launched Alpha Streams, the world’s first marketplace for alpha, with strategies listed from the global community of QuantConnect’s 80,000 quants. Our algorithm development lab facilitates the strategy process by providing the resources for comparing strategies to each other, eliminating the traditional need for juggling of Excel spreadsheets to prove a strategy’s worth. The alphas in our marketplace are hosted in our colocated, institutional-grade infrastructure and fed directly with tick feeds, enabling our community of quants to build an independently-verified, live track record.
Below are key reasons why our Alpha Streams marketplace favors quants:
Listing your alpha in our Alpha Streams marketplace gets your strategy in front of world-leading quantitative funds that are competing to license your strategy. When we created our model, we wanted to empower our community to set a monthly subscription fee for their alphas. With the Alpha Streams licensing structure being a fixed monthly fee, you can set your alpha to a fair market price. The fixed costs enable multiple funds to license an alpha in non-exclusive mode, while a second fee will allow a fund to make it exclusive.
By publishing alpha to a market of institutions, quants can quickly find funds interested in multiple strategy types, asset classes, and trading horizons. You don’t have to stick to the investing thesis of one particular fund. Instead, you can explore any idea that you can imagine, then funds will come to you if they’re interested. We want you to dedicate your time to what makes you unique: your alpha. As you focus on improving your core signal, it’s up to the fund to determine how to apply it to its portfolio.
Secure Intellectual Property
We are and will continue to be, a neutral platform. We host your alpha and provide it with live data to generate alpha signals. While funds are able to subscribe to your strategy via API, they can never view the source code of your algorithm. We carefully vet and contractually protect quants from firms reverse engineering your signals. Knowing that your IP is safe, you can rest easy knowing that the algorithms that you create are secure and remain your property.
A marketplace-based approach serves our quants, computer scientists, engineers, and students best, and that’s what we’re about, putting the community first. If you’re interested in learning more about how to get involved with Alpha Streams and list your alpha in our marketplace, please visit quantconnect.com/alpha. Happy Coding!