My research contributes an approach to SSD in finance. This contribution emerged from the
study of 8 points of research focus:
1. The first point is the study of change in the financial industry
2. The second point is the identification of a central human and computer role in leading and
adapting to change
3. The third point is the focus on key issues of the application of computer-based technology in
4. The fourth point consists of framing a wider agenda for computing in finance
5. The fifth point is the motivation of a paradigm shift at the computational level to meet the
wider agenda of computing in finance
6. The sixth point is the focus on distinctive qualities of model building in EM of particular
relevance to the wider agenda for computing in finance
7. The seventh point is the study of various aspects of EM technology that support a paradigm
shift at the computational level
8. The 8th point is the consideration of four case studies that reveals how EM technology can
provide a framework for SSD in finance: in the financial enterprise, the financial market,
financial engineering, and financial analysis
The thesis supported at a conceptual level and at a practical level (where possible) four
The first claim is that the essential characters of SSD in EM are of particular relevance to
SSD in the financial enterprise
The second claim is that the distinctive qualities of model building in EM meet the technical
and strategic demands of the wider agenda for computing in finance
The third claim is that Distributed EM framework and technology support SSD for financial
The fourth claim is that the paradigm shift in SSD in EM promises a closer integration
between the FRD and SSD activities.
In making this contribution, I owe acknowledgement to Dr. Meurig Beynon, Dr. Steve Russ, Prof
Graham Nudd, and members of the EM research group, in particular to Patrick Sun for
identifying the essential characters of SSD in EM and developing DEM technology and
I owe acknowledgement to Diane Sonnenwald at Rutgers University for her interest in EM
research which in turn raised my interest in her research on HIB.
I owe acknowledgement to Dr. Samir Garbaya, at Laboratoire de Robotique de Paris, for his
contribution to the Virtual Reality version of the financial market case study model.
I owe acknowledgement to Prof Larry Harris at the Univversity of Southern California for his
comment on an earlier version of the thesis.
I owe acknowledgement to Dr. Nick Webber at Warwick Business School and Jessica James for
introducing me to the spreadsheet implementation of their interest rate model described in their
joint text book “Interest rate modelling” Willey Publication.
I owe acknowledgement to Keng-Yu Ho at Warwick Business School for sharing with me his
doctoral research on long horizon event studies.
May I thank your participation in the appraisal of my thesis and I am glad to take your questions
and clarify my contribution.
The financial industry is witnessing major changes.
The financial enterprise is undergoing major business process renewal accompanied with the
introduction of new technologies including electronic commerce;
the financial market is shifting from an old to a new trading model that introduces major
structural changes to the market and new roles for market participants;
investment offers access to ever larger repositories of financial information and a wider choice of
financial instruments to fulfill rising needs and expectations.
It is difficult to identify exactly the drivers of change and it is clear that the pace of change will
continue in the future.
“The only thing that won’t change is the fact that everything will continue to change”.
Timothy W. Ryan [Rya97].
In all these developments, there is a central role for human intelligence that can potentially
influence the pattern of change and direct appropriate decisions in adapting to change.
There is also a vital need for computer based technology to support this human activity.
Key issues for the application of computer-based technology in finance are centred around:
software integration and virtual collaboration in the financial enterprise
the shift from the old to the new trading model in the financial market,
computer mediated interpersonal interaction in financial engineering
and providing an adequate approach to SSD for the FRD activity.
The wider agenda for computing in finance addresses technical and strategic demands that can be
met by adopting a broad foundation of computing drawing on a suitable framework for deploying
prevailing computing practices and leveraging novel uses of computer within this framework.
Technical demands take into account the experiential and the human factors, and the
pervasive1 emergence of computing.
Strategic demands take into consideration qualitative uses of computer based technology to
support diverse real world activities that are cognitive rather than operational, such as
decision support, business process modelling, learning, management, interpersonal
The broad foundation of computing aims at providing a framework for developing software
that takes into account the human factor, the integration of the social and technical aspects,
human insight, the experiential and situated aspects, different viewpoints of analysis, a
holistic rather than an abstract view of the domain of study, cognitive rather than operational
activities, and group social interaction.
This factor refers to the application of computer based technology in various devices including interactive
TV, mobile phone, etc.
The ultimate aspiration of the wider agenda for computing is to transform the computer as it is
used in finance from an advanced calculator to an 'instrument of mind'.
Addressing the wider agenda of computing motivates a paradigm shift at the computational level
a reconstruction of the software system development activity in a wider framework capable of
addressing technical and strategic demands. This involves the emphasise on amethodological,
situated and human centred approaches to software system development that favour user-
developer-designer collaboration in distributed modelling of a broader view of a system
where human role is central. This wider framework computational framework unifies the
classical culture, in which mathematical financial modelling has a central place, with the
emerging culture, where there is greater emphasis upon human interaction and experiential
aspects of computer use.
New uses of computer that support cognitive rather than operational activities
Greater integration between the computer based activity and activities in the real world. Such
integration provides computer based support for tackling domain specific needs.
Motivation for Empirical Modelling is wide subject covering various aspects of studies in computer science.
EM Summarizing the objectives and the contribution of EM to studies in computer sciences in few
points fail to do justice to the aim and long term objectives and vision of EM research.
In this thesis EM was presented as:
a suite of key concepts, tools, techniques, and notations that aims to achieve greater
integration of the human and computational activity by adopting novel software system
A technology that offers distinctive characteristics for model building. Model building in EM
is a situated activity in which the roles of the modeller, the artefact, and the situation are
inseparably linked, and leads to the construction of computer-based artefacts that stand in a
special relation to the modeller’s understanding and to the situation to which they refer.
EM was presented as a technology that provides a modelling framework that stand in a
particular relationship to OO, AI, and VR technologies. EM precedes Object Oriented
Modelling in identifying entities and their reliable pattern of behavior suitable for object and
corresponding methods abstraction. It proposes new foundations for artificial intelligence that
take into account experiential knowledge in developing computer based artefacts. It promises
support to VR technology at the analysis and design level to take into account the social
aspect of a virtually mediated environment [SBG00]. It provides a framework that
complements formal representation and rigid symbol based modelling with experience based
modelling favoring semi automated activities.
And finally EM was presented in this thesis as a technology that emphasizes the importance
of a broad foundation for computing capable of embracing, when possible, disparate
technologies in an open development environment.
The distinctive qualities of model building in EM can potentially support a paradigm shift at the
In providing a unified computational framework
And in establishing a closer integration between the computational and real world activities
The main contribution of the thesis is the consideration of several case studies that supports four
1) The first claim is that the essential characters of SSD in EM support SSD in the financial
enterprise. In particular
- the consideration of SSD in EM as a human activity that needs technical support would
support SSD for software integration that takes into consideration the technical aspects
and social aspects of software integration. The technical aspects refers to data and
operation on data and the social aspects refers to the modes of interaction of human
agents accessing the data and the context of interaction.
- The consideration of SSD in EM as highly associated with its situated context supports a
SSD for software integration that takes into account the situated and context dependent
aspect of this activity.
- The consideration of human agents as the most important dimension in SSD supports
SSD for virtual collaboration that is bounded to the HIB and information horizon of
participants in the collaborative activity
- The consideration of interpersonal interaction as the most crucial activity in SSD in EM
support SSD for virtual collaboration
2) The second claim is that the distinctive qualities of model building in EM meets the strategic
and technical demands of modelling the financial market and supporting the shift from the old to
the new trading model. In particular:
- The use of artefact for experiential knowledge construction and the representation of state
as experienced in EM meet the strategic demand of understanding the trading
environment and the behavior of market participants.
- The semantic relationship between the computer based artefact and the real world
application domain in EM meet the strategic demand of providing semi-automated
decision support for market participants.
- The representation of state as experienced and the support of different agent views of a
domain of study (open-ended, constrained, and circumscribed agency) meet the strategic
demand of re-engineering the financial trading process.
- The communication of definitive script in DEM meets the technical demands of
representing diverse kind of agency in the financial market, and complex modes of
3) the third claim is that DEM technology and framework supports SSD for financial engineering.
- The DEM framework relies on the theory of distributed cognition and ethnomethodology.
In this framework modeller collaborate as internal agents shaping the state of the model
through views and privileges of actions that are set by an external observer who creates
the context of interaction. This framework support collaborative modelling and agency
role gives modellers privileges to view observables and introduce change to the state of
these observables. The DEM framework supports SSD for financial engineering that
views financial engineering as a social activity involving a network of practitioners or
academics and where interpersonal interaction is an essential activity.
- DEM technology is based on the Communication of definitive scripts; the support of
various modes of interaction; and the Client server architecture for network
communication. As such DEM technology provides technical support for distributed
financial engineering involving diverse agency roles and complex modes of interaction.
4) the third claim is that the paradigm shift in SSD promises a closer integration of SSD and FRD
activities. In particular:
- The shift from a developer centred approach to SSD to a an EM approach to SSD where
user developer designer collaborate in the SSD activity adapts to the view of FRD is a
- The shift from structured approach to SSD to a situated, amethodological, and context
dependent approach to SSD in EM adapts to a situated account the FRDC.
- The shift from programming to pervasive agent oriented explanatory modelling in EM
adapts to a holistic view of the FRDC.
The thesis sheds light on the application and future prospect of EM technology as a framework
for SSD in finance. With its wider view of the computational activity, EM technology has offered
both strategic and tactical support to my research, and empowered it with principles that helped in
uncovering hidden relationships between the two domains computer and finance.