QMM NEWS:

  • Kumiega and Van Vliet speak at Microsoft Conferences in New York and Chicago.

  • Quality Money Management is published in March, 2008.

  • Kumiega and Van Vliet to speak on quality and algorithmic finance at the 4th World Congress for Software Quality.

  • QMM BLOG

WHAT IS QUALITY MONEY MANAGEMENT?

Quality Money Management (QMM), first proposed in 2007 by Andrew Kumiega and Ben Van Vliet (and also known in some sectors as Quality Portfolio Management (QPM)), is composed of all the procedures for development, research, testing, implementation, and management of trading/investment systems, including delineation of responsibilities, all deliberately aimed at achieving performance levels consistent with or above the specifications of seed capital providers and investors. This is not a onetime effort. QMM requires ongoing commitment to improve continuously the systems of trade selection, execution, risk management, and all other trading/investment system processes and the performance of statistical process control on risk attributes. When these procedures are taken together, they define how management of the trading/investment organization operates.

The goal of our methodology, called K|V, is Quality Money Management. We define the goals of Quality Money Management to be as follows:

• Build trading/investment systems that deliver better performance to investors.

• Shorten the trading/investment system design and development cycle, the time it takes to turn a trading idea into a finished, working system.

• Formalize the process and increase the speed with which new trading ideas are evaluated and either discarded or promoted, called strategy cycling.

• Formalize the process and increase the speed of recognizing and shutting down trading/investment systems that no longer have a competitive advantage.

• Reduce the total cost of trading/investment system design and development.

• Provide seed capital investors with a real options model for capital burn rates and stepped commitment of capital.

• Formalize a process of developing, building, and packaging working trading/investment systems for sale to larger institutions.

• Enable seed capital providers to better allocate scarce resources and prioritize individual trading/investment systems within a portfolio of competing systems.

• Lengthen the maturity stage of working trading systems through continuous improvement.

• Satisfy the demand by investors and regulators for greater transparency through greater and standardized documentation.

• Create a taxonomy of risk for trading/investment system development and management and employ best practices to reduce risks.

• Provide a mechanism for effective self-evaluation, the preferred form of oversight in the financial industry.

In general, applying the techniques of quality to money management (Quality Money Management) will provide better trading/investment systems for seed capital providers, investors, and employees.

How costly can poor quality in the front office be?  Check out some news stories of poor quality control in finance.

Click here to purchase.

Copyright 2008, Kumiega and Van Vliet