Telecoms Awards 2011

Best Wireless Telecoms Provider, 2011

Best Wireless Telecoms Provider, Western Europe   
Avea

Best Wireless Telecoms Provider, Eastern Europe
Polska Telefonia Cyfrowa S.A.

Best Wireless Telecoms Provider, North America
Verizon Wireless

Best Wireless Telecoms Provider, Latin America
Vivo

Best Wireless Telecoms Provider, Asia   
KDDI

Best Wireless Telecoms Provider, Africa
MTN

Best Wireless Telecoms Provider, Middle East
Samatel

Best Wireless Telecoms Provider, Australasia  
VirginMobile

 

Best Fixed Line telecoms Provider, 2011

Best Fixed Line telecoms Provider, Western Europe   
Türk Telekom

Best Fixed Line telecoms Provider, Eastern Europe
Telekomunikacja Polska S.A.

Best Fixed Line telecoms Provider, North America
Qwest

Best Fixed Line telecoms Provider, Latin America
Oi Fixo

Best Fixed Line telecoms Provider, Asia   
China Netcom

Best Fixed Line telecoms Provider, Africa
Uganda Telecom Ltd

Best Fixed Line telecoms Provider, Middle East
Nawras

Best Fixed Line telecoms Provider, Australasia
Primus

Best Fully Intergraded Telecoms Provider, 2011

Best Fully Intergraded Telecoms Provider, Western Europe
Telecom Italia

Best Fully Intergraded Telecoms Provider, Eastern Europe   
Magyar Telekom

Best Fully Intergraded Telecoms Provider, North America
Sprint Nextel

Best Fully Intergraded Telecoms Provider, Latin America
Embrapar

Best Fully Intergraded Telecoms Provider, Asia
Bharti Airtel

Best Fully Intergraded Telecoms Provider, Africa
Uganda Telecom

Best Fully Intergraded Telecoms Provider, Middle East
Emirates Telecommunications Corporation

Best Fully Intergraded Telecoms Provider, Australasia
Telstra

 

Best Telecoms Infrastructure Provider, 2011

Western Best Telecoms Infrastructure Provider, Europe
Alcatel-Lucent

Best Telecoms Infrastructure Provider, Eastern Europe   
Spectrum Net

Best Telecoms Infrastructure Provider, North America   
IBM

Best Telecoms Infrastructure Provider, Latin America   
Oi

Best Telecoms Infrastructure Provider, Asia   
Huawei

Africa
Nokia Siemens Networks

Best Telecoms Infrastructure Provider, Middle East
Huawei

Best Telecoms Infrastructure Provider, Australasia
IBM

 

Best Telecoms Innovation, 2011

Best Telecoms Innovation, Western Europe
GLOBO

Best Telecoms Innovation, Eastern Europe
Maktel

Best Telecoms Innovation, North America  
iBasis

Best Telecoms Innovation, Latin America   
Telefonica

Best Telecoms Innovation, Asia
Vodafone Essar

Best Telecoms Innovation, Africa   
MTN
Best Telecoms Innovation, Middle East
Du
Best Telecoms Innovation, Australasia   
F-Secure

 

Best Financial Services Telecoms Application, 2011

Best Financial Services Telecoms Application, Western Europe   
4XP

Best Financial Services Telecoms Application, Eastern Europe   
X-Trade Brokers

Best Financial Services Telecoms Application, North America   
IG Markets

Best Financial Services Telecoms Application, Latin America
BM&FBovespa

Best Financial Services Telecoms Application, Asia
CMC Markets

Best Financial Services Telecoms Application, Africa
Neo Africa

Best Financial Services Telecoms Application, Middle East   
Mubasher

Best Financial Services Telecoms Application, Australasia
Bell Direct

 

Best BPO Company, 2011

Best BPO Company,Western Europe
KPS International

Best BPO Company,Eastern Europe
Ariba

Best BPO Company,North America
Vertex

Best BPO Company,Latin America
Panamsys, S.A.S

Best BPO Company,Asia   
Telnet

Best BPO Company,Africa
Global BPO

Best BPO Company,Middle East
Araxel

Best BPO Company,Australasia
Aegis

 

Best Conferencing Provider, 2011

Best Conferencing Provider, Western Europe
BT

Best Conferencing Provider, Eastern Europe
BT

Best Conferencing Provider, North America
Polycom

Best Conferencing Provider, Latin America
InterCall

Best Conferencing Provider, Asia
Tandberg

Best Conferencing Provider, Africa
ConferencePlus

Best Conferencing Provider, Middle East   
Cisco

Best Conferencing Provider, Australasia
Adobe

Global awards Telecoms CEO of the Year, 2011
Gökhan Bozkurt – Türk Telekom

Telecoms CFO of the Year, 2011
Mr Aldo Mareuse – Orascom Telecom Holding

Telecoms CTO of the Year, 2011
Philip Tohme – VimpleCom

Best Green Telecoms Company, 2011
Azercell Telecom

Best Mobile Handset Manufacturer, 2011
Apple

Telecoms CEO of the Year, 2011
Gökhan Bozkurt – Türk Telekom

Telecoms CFO of the Year, 2011
Mr Aldo Mareuse – Orascom Telecom Holding

Telecoms CTO of the Year, 2011
Philip Tohme – VimpleCom

Best Green Telecoms Company, 2011
Azercell Telecom

Best Mobile Handset Manufacturer, 2011
Apple

Oil & Gas Awards 2011

Best Fully-Integrated Oil and Gas Company

 

Best Fully-Integrated Oil and Gas Company, Western Europe
Total

Best Fully-Integrated Oil and Gas Company, Eastern Europe  
MOL Energy

Best Fully-Integrated Oil and Gas Company, Middle East   
Petrixo Group

Best Fully-Integrated Oil and Gas Company, North America

Petróleos Mexicanos (PEMEX)

Best Fully-Integrated Oil and Gas Company, Latin America   

Petrobras

Best Fully-Integrated Oil and Gas Company, Asia   
PTT Public Company Limited

Best Fully-Integrated Oil and Gas Company, Africa  
PetroSA

 

Best Oil and Gas Exploration Company

 

Best Oil and Gas Exploration Company, Western Europe   
Cuadrilla

Best Oil and Gas Exploration Company, Eastern Europe   

Gazprom

Best Oil and Gas Exploration Company, Middle East  

Kuwait Energy Company

Best Oil and Gas Exploration Company, North America   

Duke Energy

Best Oil and Gas Exploration Company, Latin America   

Pacific Rubiales Energy

Best Oil and Gas Exploration Company, Asia   

Petronas

Best Oil and Gas Exploration Company, Africa   

Groupe Sonatrach
Best Oil and Gas Innovation in Exploration Technology

 

Best Oil and Gas Innovation in Exploration Technology, Western Europe   
GE Oil & Gas

Best Oil and Gas Innovation in Exploration Technology, Eastern Europe 

BASF

Best Oil and Gas Innovation in Exploration Technology, Middle East   

Schlumberger

Best Oil and Gas Innovation in Exploration Technology, North America   

Grace LLC

Best Oil and Gas Innovation in Exploration Technology, Latin America   

Pacific Rubiales Energy

Best Oil and Gas Innovation in Exploration Technology, Asia   

Santos Limited

Best Oil and Gas Innovation in Exploration Technology, Africa   

Port Harcourt Refining Co.

 

Best Independent Oil and Gas Company

 

Best Independent Oil and Gas Company, Western Europe   
Tullow Oil

EBest Independent Oil and Gas Company, astern Europe   

Lukoil

Best Independent Oil and Gas Company, Middle East   

Genel Energy International

Best Independent Oil and Gas Company, North America  

Breitling Oil & Gas

Best Independent Oil and Gas Company, Latin America   

BPZ Energy

Best Independent Oil and Gas Company, Asia   

JX Nippon Oil & Energy Co.

Best Independent Oil and Gas Company, Africa   

Kosmos Energy

Best Oil and Gas Refining Company

Best Oil and Gas Refining Company, Western Europe   
PKN Orlen

Best Oil and Gas Refining Company, Eastern Europe   

Surgutneftegas

Best Oil and Gas Refining Company, Middle East   
Takreer

Best Oil and Gas Refining Company, North America  
Valero Energy

Best Oil and Gas Refining Company, Latin America   
Manguinhos Refineria de Petroleos

Best Oil and Gas Refining Company, Asia   
Thai Oil Public Company Limited

Best Oil and Gas Refining Company, Africa   
Egyptian General Petroleum Company

 

Best Oil and Gas Innovation in Refining Technology

 

Best Oil and Gas Innovation in Refining Technology, Western Europe   
ABB
Best Oil and Gas Innovation in Refining Technology, Eastern Europe   
Rosneft

Best Oil and Gas Innovation in Refining Technology, Middle East   
BAPCO

Best Oil and Gas Innovation in Refining Technology, North America   
Foster Wheeler

Best Oil and Gas Innovation in Refining Technology, Latin America   
Honeywell

Best Oil and Gas Innovation in Refining Technology, Asia   
Bangchak Petroleum

Best Oil and Gas Innovation in Refining Technology, Africa   
BP

 

Best Oil and Gas Drilling Contractor

Best Oil and Gas Drilling Contractor, Western Europe   
Odjfell

Best Oil and Gas Drilling Contractor, Eastern Europe   
Crosco Integrated Drilling & Well Services Co.

Best Oil and Gas Drilling Contractor, Middle East   
National Drilling Company (Abu Dhabi)

Best Oil and Gas Drilling Contractor, North America   
Ensco

Best Oil and Gas Drilling Contractor, Latin America   
Independence S.A.

Best Oil and Gas Drilling Contractor, Asia   
Bourbon Offshore

Best Oil and Gas Drilling Contractor, Africa   
Challenger Limited

 

Best Innovation in Drilling Technology

Best Innovation in Drilling Technology, Western Europe   
Prekubator

Best Innovation in Drilling Technology, Eastern Europe   
OMV

Best Innovation in Drilling Technology, Middle East   
Abu Dhabi National Oil Company (ADNOC)

Best Innovation in Drilling Technology, North America   
Tesco Corporation

Best Innovation in Drilling Technology, Latin America   
SISMOPETROL S.A.

Best Innovation in Drilling Technology, Asia   
Archer

Best Innovation in Drilling Technology, Africa   
PetroSA

 

Best Downstream Oil and Gas Company

Best Downstream Oil and Gas Company, Western Europe   
Statoil

Best Downstream Oil and Gas Company, Eastern Europe   
Georgian Oil and Gas Corporation

Best Downstream Oil and Gas Company, Middle East   
Saudi Aramco

Best Downstream Oil and Gas Company, North America   
Chevron

Best Downstream Oil and Gas Company, Latin America   
Organización Terpel S.A.

Best Downstream Oil and Gas Company, Asia   
Star Petroleum

Best Downstream Oil and Gas Company, Africa   
EGAS

 

Best Oil and Gas Downstream Service and Solutions Company

Best Oil and Gas Downstream Service and Solutions Company, Western Europe   
SGS

Best Oil and Gas Downstream Service and Solutions Company, Eastern Europe
3M

Best Oil and Gas Downstream Service and Solutions Company, Middle East   
Addax&Oryx Group

Best Oil and Gas Downstream Service and Solutions Company, North America   
Weir Oil & Gas

Best Oil and Gas Downstream Service and Solutions Company, Latin America   
Grupo OAS

Best Oil and Gas Downstream Service and Solutions Company, Asia   
IRPC

Best Oil and Gas Downstream Service and Solutions Company, Africa   
PetroSA

 

Best Oil and Gas Clean Energy Company

Best Oil and Gas Clean Energy Company, Western Europe   
Shell

Best Oil and Gas Clean Energy Company, Eastern Europe   
Gazprom

Best Oil and Gas Clean Energy Company, Middle East   
Masdar

Best Oil and Gas Clean Energy Company, North America   
Emerson

Best Oil and Gas Clean Energy Company, Latin America   
GAZEL

Best Oil and Gas Clean Energy Company, Asia   
Thai Oil Public Company Limited

Best Oil and Gas Clean Energy Company, Africa   
Sasol


Best Oil and Gas Project

Best Oil and Gas Project, Western Europe   
Cuadrilla (Preese Hall Field 1)

Best Oil and Gas Project, Eastern Europe   
OAO Novatek (Yurkharovskye Field)

Best Oil and Gas Project, Middle East   
Saudi Aramco (Khursaniyah Field)

Best Oil and Gas Project, North America   
Chevron (Blind Faith Field)

Best Oil and Gas Project, Latin America   
HRT Particpacoes (Solimoes Basin)

Best Oil and Gas Project, Asia
Chevron (Platong Gas Field II)

Best Oil and Gas Project, Africa
Tullow Oil (Jubilee Field)

 

Best Oil and Gas Investment Company

Best Oil and Gas Investment Company, Western Europe   
UBS Energy Investments

Best Oil and Gas Investment Company, Eastern Europe   
Kulczyk Investments

Best Oil and Gas Investment Company, Middle East   
Boubyan Petrochemical Company

Best Oil and Gas Investment Company, North America   
Citi Group

Best Oil and Gas Investment Company, Latin America   
Itau Unibanco

Best Oil and Gas Investment Company, Asia
Fortune Oil

Best Oil and Gas Investment Company, Africa
Standard Bank


Best Oil and Gas Production Service and Solutions Company

Best Oil and Gas Production Service and Solutions Company, Western Europe   
CGGVeritas

Best Oil and Gas Production Service and Solutions Company, Eastern Europe   
3M

Best Oil and Gas Production Service and Solutions Company, Middle East   
Petrofac

Best Oil and Gas Production Service and Solutions Company, North America   
Schlumberger

Best Oil and Gas Production Service and Solutions Company, Latin America   
Team Service Solutions Provider

Best Oil and Gas Production Service and Solutions Company, Asia   
IHS Global E&P Services

Best Oil and Gas Production Service and Solutions Company, Africa   
Transocean


Best Oil and Gas EPC Company

Best Oil and Gas EPC Company, Western Europe   
Technip

Best Oil and Gas EPC Company, Eastern Europe   
Aker Solutions

Best Oil and Gas EPC Company, North America   
SNC-Lavalin

Best Oil and Gas EPC Company, Latin America   
Skanska Latin America

Best Oil and Gas EPC Company, Middle East   
National Petroleum Construction Company (Abu Dhabi)

Best Oil and Gas EPC Company, Asia
CUEL Public Company

Best Oil and Gas EPC Company, Africa
AMEC

 

Best Oil and Gas Logistics Company

Best Oil and Gas Logistics Company, Western Europe   
CLH

Best Oil and Gas Logistics Company, Eastern Europe
Cross Caspian Oil and Gas Logistics

Best Oil and Gas Logistics Company, Middle East
Weatherford International

Best Oil and Gas Logistics Company, North America
Halliburton

Best Oil and Gas Logistics Company, Latin America   
LOGISTICA DEL NEUQUEN S.A.

Best Oil and Gas Logistics Company, Asia
Siam Gas

Best Oil and Gas Logistics Company, Africa   
Baker Hughes

 

Best Oil and Gas Safety Service and Solutions

Best Oil and Gas Safety Service and Solutions, Western Europe   
Inmarsat

Best Oil and Gas Safety Service and Solutions, Eastern Europe   
Promtekh Group Holding

Best Oil and Gas Safety Service and Solutions, Middle East   
United Safety

Best Oil and Gas Safety Service and Solutions, North America   
Athens Group

Best Oil and Gas Safety Service and Solutions, Latin America   
Saxon Energy Services Inc.

Best Oil and Gas Safety Service and Solutions, Asia
Equilibria

Best Oil and Gas Safety Service and Solutions, Africa
Global Engineering and Safety

Real Estate Awards 2011

Best Retail Developer, Western Europe
Turkmall

Best Residential Developer, Western Europe
Gecina

Best Office Developer, Western Europe
Brookfield Europe

Best Investment Fund Manager, Western Europe
Frogmore Real Estate Partners Investment Managers Limited

Best Consultants for Financial Services, Western Europe
WP Carey

Best Consultants for Taxation Services, Western Europe
Ernst & Young Real Estate Group

 

 

Best Retail Developer, Eastern Europe
Plaza Centers

Best Residential Developer, Eastern Europe
AFI Europe

Best Office Developer, Eastern Europe
Globe Trade Centre SA

Best Investment Fund Manager, Eastern Europe
Swedbank

Best Consultants for Financial Services, Eastern Europe
Erste Group Immorent

Best Consultants for Taxation Services, Eastern Europe
Ernst & Young Real Estate Group

 

 

Best Retail Developer, Russia
Crocus Group

Best Residential Developer, Russia
Algarov Real Estate

Best Office Developer, Russia
Tashir Group of Companies

Best Investment Fund Manager, Russia
Renaissance Real Estate

Best Consultants for Financial Services, Russia
Sberbank

Best Consultants for Taxation Services, Russia
Ernst & Young Real Estate Group

 

 

Best Retail Developer, Africa
Acucap Properties

Best Residential Developer, Africa
M&T Development

Best Office Developer, Africa
M&T Development

Best Investment Fund Manager, Africa
Old Mutual Property

Best Consultants for Financial Services
CB Richard Ellis

Best Consultants for Taxation Services, Africa
Ernst & Young Real Estate Group

 

 

Best Residential Developer, South Eastern Asia
Dijaya Corporation Bhd

Best Retail Developer, South Eastern Asia
Central Pattana Public Company Limited

Best Office Developer, South Eastern Asia
Keppel Land

Best Investment Fund Manager, South Eastern Asia
Ascott Residence Trust Management Limited

Best Consultants for Financial Services, South Eastern Asia
Allen & Overy

Best Consultants for Taxation Services, South Eastern Asia
Ernst & Young

 

 

Best Residential Developer, Indian Sub-Continent
Kalpataru Group

Best Retail Developer, Indian Sub-Continent
Prestige Estates Projects

Best Office Developer, Indian Sub-Continent
Synefra Engineering & Construction

Best Investment Fund Manager, Indian Sub-Continent
Kotak Investment Advisors

Best Consultants for Financial Services, Indian Sub-Continent
Central Bank of India

Best Consultants for Taxation Services, Indian Sub-Continent
Ernst & Young Real Estate Group

 

 

Best Residential Developer, Latin America
Gafisa

Best Retail Developer, Latin America
Sonae Sierra

Best Office Developer, Latin America
Cyrela Commercial Properties SA

Best Investment Fund Manager, Latin America
Brookfield Brazil

Best Consultants for Financial Services, Latin America
BFRE

Best Consultants for Taxation Services, Latin America
Ernst & Young Real Estate

 

 

Best Retail Developer, North America
Forest City

Best Residential Developer, North America
Brookfield Residential Properties Inc

Best Office Developer, North America
Brookfield Office Properties Inc

Best Investment Fund Manager, North America
Brookfield Asset Management Inc

Best Consultants for Financial Services, North America
CIBC

Best Consultants for Taxation Services, North America
Ernst & Young Real Estate

 

 

Best Residential Developer, Middle East
Al Hanoo Holding Company

Best Retail Developer, Middle East
Majid Al Futtaim Properties

Best Office Developer, Middle East
Omniyat

Best Investment Fund Manager, Middle East
SEDCO Capital

Best Consultants for Financial Services, Middle East
SEDCO

Best Consultants for Taxation Services, Middle East
Ernst & Young Real Estate

Insurance Awards 2011

Insurance Company of the Year, Argentina
Mapfre

Insurance Company of the Year, Austria
Donau Versicherung AG

Insurance Company of the Year, Baltic States   
BTA

Insurance Company of the Year, Belgium   
AXA

Insurance Company of the Year, Brazil   
ACE Seguradora S.A.

Insurance Company of the Year, Canada
Intact Financial Corporation

Insurance Company of the Year, Caribbean   
Guardian Life of the Caribbean Limited

Insurance Company of the Year, Chile
ING

Insurance Company of the Year, Colombia
Seguros Bolivar

Insurance Company of the Year, Croatia
Allianz Zagreb

Insurance Company of the Year, Czech Republic   
Allianz

Insurance Company of the Year, Denmark
Danica Pension

Insurance Company of the Year, Ecuador
Seguros de Pinchincha

Insurance Company of the Year, France   
BNP Parisbas Assurances

Insurance Company of the Year, Finland   
Pohjola Insurance

Insurance Company of the Year, Germany   
Talanx AG

Insurance Company of the Year, Greece   
Interamerican S.A.

Insurance Company of the Year, Hong Kong   
HSBC Insurance

Insurance Company of the Year, Hungary   
UNIQA Biztosító Zrt.

Insurance Company of the Year, India   
SBI Life

Insurance Company of the Year, Indonesia   
PT Asuransi Jiwasraya (Persero)

Insurance Company of the Year, Italy   
Mediolanum SpA

Insurance Company of the Year, Ireland   
FBD Insurance

Insurance Company of the Year, Kazakhstan   
BTA Insurance

Insurance Company of the Year, Malaysia   
Lonpac Insurance Bhd

Insurance Company of the Year, Mexico   
GNP Seguros

Insurance Company of the Year, Middle East   
Abu Dhabi National Insurance Company

Insurance Company of the Year, Netherlands
Menzis

Insurance Company of the Year, Norway   
If

Insurance Company of the Year, Pakistan   
New Jubilee Life Insurance Company

Insurance Company of the Year, Peru   
Pacifico Seguros

Insurance Company of the Year, Philippines   
Malayan Insurance Company

Insurance Company of the Year, Poland   
ING TUnZ

Insurance Company of the Year, Portugal   
Millennium bcp Ageas S.A.

Insurance Company of the Year, Russia   
Alfa Strakhovanie

Insurance Company of the Year, Serbia   
DDOR Novi Sad

Insurance Company of the Year, Singapore   
AIA

Insurance Company of the Year, Slovakia   
CSOB Poist’ovna a.s.

Insurance Company of the Year, Slovenia   
Maribor

Insurance Company of the Year, South Africa   
Hollard Group

Insurance Company of the Year, Spain   
AXA

Insurance Company of the Year, Sweden   
Avanza

Insurance Company of the Year, Switzerland   
Helvetia Group

Insurance Company of the Year, Taiwan   
Fubon Life Insurance Co.

Insurance Company of the Year, Thailand   
The Viriyah Insurance Co.,  Ltd.

Insurance Company of the Year, Turkey   
AXA SIGORTA

Insurance Company of the Year, Ukraine   
INGO Ukraine

Insurance Company of the Year, UK 
BUPA

Insurance Company of the Year, USA 
MetLife

Insurance Company of the Year, Vietnam
Petrovietnam Insurance JSC

The economies of fiction

In early 2010, the world economy may finally be emerging from the deepest recession since the 1930s. The blame for the recession has been put on many things, including the US housing market, complex credit derivatives, risk models, banker bonuses, and so on. However I believe that the problems run much deeper than that; for they can be traced back to a set of economic myths which have been cultivated and maintained over the last century and a half, ever since economics was invented.

These myths include the ideas that markets are stable, self-regulating, and efficient; the idea of a rational economic man; and even the idea that the economy can be described in terms of mathematical laws.

Although heterodox economists have argued against many of these for years, they are remarkably persistent and still make their presence felt in introductory textbooks, in the models used for policy decisions, and in the risk models used by banks. The only way we can get the economy on a more sustainable path, I believe, is to finally rid ourselves of these distorting fictions. So in the next few months, I will be writing on a number of these myths, starting today with one that will be rather counter-intuitive to anyone who has been awake the last couple of years, namely the myth that markets are stable.

This idea can be traced back at least to the equilibrium theory proposed by Léon Walras in the 19th century. In his 1874 book Elements of Pure Economics, he imagined a perfect competitive economy where an auctioneer acted as an intermediary between buyers and sellers. The auctioneer would start off with an initial price, then adjust it in a “groping” process – or tâtonnement, it sounds better in French – until buyers and sellers were in agreement, and the market cleared. Economists believed this price represented a stable equilibrium.

Weighing supply and demand
Of course, markets usually don’t have an auctioneer, so their invisible hand has to grope its way to equilibrium all by itself. However, a similar auctioning process is used to set the price of gold, in the ritual known as the London Gold Fix. Twice daily, at 10:30 AM and 3:00 PM, five people representing the city’s largest gold traders hold a teleconference to buy and sell gold bars. The chairman announces a starting price, and everyone says how many bars they want to buy or sell at that price. If demand exceeds supply, the chairman raises the price; otherwise he lowers it. The process continues until the buyers and sellers are in agreement.

While the resulting price may represent a temporary truce between supply and demand, it doesn’t however seem to resemble a stable equilibrium. A cursory examination of the gold price, including its rise last year to over $1,000 per ounce, reveals that it has been rather unstable ever since 1970, which was when the dollar peg was abandoned. Stability, it seems, is more the sign of government control, than the invisible hand of the markets. Other assets such as currencies or stocks also seem to have a bad case of the shakes. So what is going on?

Before giving my interpretation, I should first explain something of my background. I am not an economist, but an applied mathematician working primarily in the area of systems biology. In many ways the economy can be viewed as a biological system – at the most basic level, it imports energy and resources, transforms them in various ways, and expels

waste – and as we’ll see many techniques and insights from systems biology turn out to be directly applicable to business and finance.

Now, in biology, the only systems that are completely stable, are the ones that are dead. Since the economy is verifiably still alive (even after its near-death experience of the credit crunch), the idea of static equilibrium is something of a non-starter. Indeed, living systems operate at a state which is best described as far from equilibrium, in the sense that their components are constantly being churned around instead of sliding into stasis.

This does not mean that living systems are erratic or uncontrolled. The human body, for example, needs to maintain key parameters such as body temperature, salinity, or blood glucose levels within certain limits. It accomplishes this by using complex feedback loops which control and regulate the system. When these regulatory systems break down, the result can be ill-health.

To understand how these feedback loops work, systems biologists use techniques from the branch of applied mathematics known as nonlinear dynamics. Positive feedback has the effect of amplifying signals, and is used to provide a rapid response. Negative feedback acts to damp out the signal, and is used for control. The two types of feedback usually act in concert to give a controlled response to stimuli.

So what does all this have to do with the price of gold? Well, it too is characterised by feedback loops. Negative feedback occurs because when the price gets too high, then people may decide it is over-valued and sell their holdings. This acts to stabilise the price. However, that isn’t the whole story. For gold is of course desired, not just for its industrial applications or attractive bright colour, but for its perceived value as a financial investment. When the price of gold is going up, then to many it becomes more attractive, because this confirms the story that it is a good investment. A change in price is therefore amplified: positive feedback.

The presence of positive feedback means, from nonlinear dynamics theory, that there is no reason to expect the price of gold to have a stable equilibrium. The same kind of feedback loops are seen throughout the rest of the economy. Their most spectacular manifestation is in the form of financial bubbles and crashes. On the way up, the asset of choice (tulips in 17th century Holland, houses in 21st century America) becomes very attractive exactly because it is going up in value (and conversely on the way down).

Clear horizons spell trouble
The problem today is that our standard economic theories do not properly take into account these effects, and instead seem fixated on stability. Risk models assume that the economy is essentially stable, so that the past will resemble the future. General Equilibrium Models, used by governments and central banks to make policy decisions, assume that the economy has an inherently stable equilibrium point. Popular theories such as the efficient market hypothesis are explicitly based on the existence of equilibrium.

So no wonder we get into trouble. If we believe that the economy is inherently stable, then there’s no need to properly regulate it – which, as shown by the credit crunch, is dangerous. In future columns, we’ll look at ways that new ideas from areas like systems biology can help to bring the economy to a better state of health.

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Technology Awards 2011

Best Accounting Technology, Western Europe
Sage

Best Accounting Technology, Eastern Europe
Kashflow

Best Accounting Technology, Asia
Intuit Quickbooks

Best Accounting Technology, Middle East
Unit4

Best Accounting Technology, Africa
Dynacom

Best Accounting Technology, North America
Sage

Best Accounting Technology, Latin America
Epicor

 

 

Best Agriculture Technology Company, Western Europe
Syngenta

Best Agriculture Technology Company, Eastern Europe
Caterpillar Inc

Best Agriculture Technology Company, Asia
Komatsu

Best Agriculture Technology Company, Middle East
Evogene

Best Agriculture Technology Company, Africa
Hyflux

Best Agriculture Technology Company, North America
Caterpillar Inc

Best Agriculture Technology Company, Latin America
Monsanto

 

 

Best Asset Management Software Provider, Western Europe
Numara

Best Asset Management Software Provider, Eastern Europe
Sage

Best Asset Management Software Provider, Asia
Temenos

Best Asset Management Software Provider, Middle East
Agile Financial Technologies

Best Asset Management Software Provider, Africa
Religare Technologies

Best Asset Management Software Provider, North America
Sungard

Best Asset Management Software Provider, Latin America
Cynel International

 

 

Best Automated Banking Branch Technology, Western Europe
Wincor Nixdorf

Best Automated Banking Branch Technology, Eastern Europe
Sanchez Computer Associates

Best Automated Banking Branch Technology, Asia
Fujitsu Limited

Best Automated Banking Branch Technology, Middle East
ERI

Best Automated Banking Branch Technology, Africa
SAS

Best Automated Banking Branch Technology, North America
IBM

Best Automated Banking Branch Technology, Latin America
Itautec S.A.

 

 

Best Banking Technology Company, North America
Sungard

Best Banking Technology Company, Western Europe
ObjectWay SpA

Best Banking Technology Company, Eastern Europe
Luxoft

Best Banking Technology Company, Middle East
Ashazi Services Co.W.L.L

Best Banking Technology Company, Asia
Polaris Software Lab Ltd.

Best Banking Technology Company, Africa
Fintech Kenya

 

 

Best Biotechnology Company, Western Europe
Farsight Bioscience Limited

Best Biotechnology Company, Eastern Europe
A&A Biotechnology

Best Biotechnology Company, Asia
Biocon

Best Biotechnology Company, Middle East
Viacentra

Best Biotechnology Company, Africa
Arvir Technologies

Best Biotechnology Company, North America
Amgen

Best Biotechnology Company, Latin America
Biogen Idec

 

 

Best Business Intelligence Software Provider, Western Europe
BOND, SA

Best Business Intelligence Software Provider, Eastern Europe
QAD

Best Business Intelligence Software Provider, Asia
CDC Software

Best Business Intelligence Software Provider, Middle East
Rocket Software

Best Business Intelligence Software Provider, Africa
Integral Fusion

Best Business Intelligence Software Provider, North America
IBM

Best Business Intelligence Software Provider, Latin America
Vink OS

 

 

Best Cloud Computing Technology Company, Western Europe
NetSuite

Best Cloud Computing Technology Company, Eastern Europe
Siemens

Best Cloud Computing Technology Company, Asia
Memset

Best Cloud Computing Technology Company, Middle East
Dell

Best Cloud Computing Technology Company, Africa
Memset

Best Cloud Computing Technology Company, North America
IBM

Best Cloud Computing Technology Company, Latin America
VMWare

 

 

Best CRM Technology, Western Europe
SAP

Best CRM Technology, Asia
Eloqua

Best CRM Technology, Middle East
Zoho

Best CRM Technology, Africa
Infor

Best CRM Technology, North America
Amdocs

Best CRM Technology, Latin America
Consona

 

 

Best Environmental Services Technology Company, Western Europe
Siemens Energy

Best Environmental Services Technology Company, Eastern Europe
Eko-Project

Best Environmental Services Technology Company, Asia
Puncak Niaga Holdings Bhd

Best Environmental Services Technology Company, Middle East
Masdar

Best Environmental Services Technology Company, Africa
Veolia

Best Environmental Services Technology Company, North America
ABB

Best Environmental Services Technology Company, Latin America
Dow Chemical Company

 

 

Best Financial Technology Consultants, North America
Bearing Point

Best Financial Technology Consultants, Latin America
Bluepoint Technologies

Best Financial Technology Consultants, Western Europe
ObjectWay SpA

Best Financial Technology Consultants, Eastern Europe
Augeo Ventures

Best Financial Technology Consultants, Middle East
Mubasher

Best Financial Technology Consultants, Asia
KapronaAsia

Best Financial Technology Consultants, Africa
Seven Seas Technologies

Best Financial Technology Consultants, North America
Convergys

 

 

Best IT Outsourcing Company, North America
Wipro

Best IT Outsourcing Company, Latin America
Paradigma

Best IT Outsourcing Company, Western Europe
Wavex

Best IT Outsourcing Company, Eastern Europe
Softserve

Best IT Outsourcing Company, Middle East
Itar Qatar

Best IT Outsourcing Company, Asia
NCC Data

Best IT Outsourcing Company, Africa
Compu-Clearing Outsourcing

 

 

Best Medical Technology Company, Western Europe
Gambro AB

Best Medical Technology Company, Eastern Europe
BMT Medical Technology

Best Medical Technology Company, Asia
Johnson & Johnson Medical Asia Pacific

Best Medical Technology Company, Middle East
Sectra

Best Medical Technology Company, Africa
Inqaba Biotech

Best Medical Technology Company, North America
SCHOTT

Best Medical Technology Company, Latin America
Ache SA

 

 

Best Middle & Back Office Solutions Provider, Latin America
Contax

Best Middle & Back Office Solutions Provider, Western Europe
DST Global Solutions

Best Middle & Back Office Solutions Provider, Eastern Europe
Infosys

Best Middle & Back Office Solutions Provider, Middle East
Oracle Middle East

Best Middle & Back Office Solutions Provider, Asia
SmartStream Technologies

Best Middle & Back Office Solutions Provider, Africa
Calypso Technology

 

 

Best Mobile Banking Technology, North America
Pyxis Mobile

Best Mobile Banking Technology, Latin America
Technisys

Best Mobile Banking Technology, Western Europe
ClairMail

Best Mobile Banking Technology, Eastern Europe
Raiffeisen Bank Polska SA

Best Mobile Banking Technology, Middle East
Acette Technologies

Best Mobile Banking Technology, Asia
Audech

Best Mobile Banking Technology, Africa
Zain

 

 

Best Network Infrastructure Provider, Western Europe
Deutsche Telekom

Best Network Infrastructure Provider, Eastern Europe
networkers.pl

Best Network Infrastructure Provider, Asia
Zenith Infotech

Best Network Infrastructure Provider, Middle East
Siemens

Best Network Infrastructure Provider, Africa
Neotel

Best Network Infrastructure Provider, North America
Comscope

Best Network Infrastructure Provider, Latin America
HCL Technologies

 

 

Best Private Banking Technology Company, North America
Fiserv

Best Private Banking Technology Company, Latin America
Temenos Group AG

Best Private Banking Technology Company, Eastern Europe
Arbes Technologies, S.R.O.

Best Private Banking Technology Company, Western Europe
Temenos Group AG

Best Private Banking Technology Company, Middle East
Fidessa

Best Private Banking Technology Company, Asia
Tata Consultancy Services Limited

Best Private Banking Technology Company, Africa
Wipro

 

 

Best Retail Banking Systems Provider, North America
Fiserv

Best Retail Banking Systems Provider, Latin America
Itautec S.A.

Best Retail Banking Systems Provider, Western Europe
ObjectWay SpA

Best Retail Banking Systems Provider, Eastern Europe
CSoft

Best Retail Banking Systems Provider, Middle East
Sigma Core

Best Retail Banking Systems Provider, Asia
Yucheng Technologies

Best Retail Banking Systems Provider, Africa
Capital Banking Solutions

 

 

Best Security Technology Provider, Western Europe
McAfee

Best Security Technology Provider, Eastern Europe
Kaspersky

Best Security Technology Provider, Asia
Lumension

Best Security Technology Provider, Middle East
Symantec

Best Security Technology Provider, Africa
Avira

Best Security Technology Provider, North America
McAfee

Best Security Technology Provider, Latin America
Itautec S.A.

 

 

Best Wireless Technology Provider, Western Europe
NXP Semiconductors N.V.

Best Wireless Technology Provider, Eastern Europe
Metallic Security

Best Wireless Technology Provider, Asia
Ceyon Technology

Best Wireless Technology Provider, Middle East
Telecom Du

Best Wireless Technology Provider, Africa
3M South Africa

Best Wireless Technology Provider, North America
Sybase

Best Wireless Technology Provider, Latin America
Spring Wireless (Brasil) Ltda

 

 

Technology CEO of the year
Tan Sri Rozali Ismail – Puncak Niaga Holdings Bhd

Technology CFO of the year
Jeffrey Child, Amerigroup Corporation

Technology CTO of the year
Ronald Louks, HTC

Business Tablet of the year
Research In Motion

Business Laptop of the year
Dell

Foreign Exchange Awards 2011

Best Forex Broker USA
Gain Capital

Best Forex Broker Latin America
InovaTrade

Best Forex Broker Canada
BMO

Best Forex Broker Asia
Instaforex

Best Forex Broker South East Asia
Hantec Markets

Best Forex Broker Australasia
FXOpen

Best Forex Broker Africa
Liteforex

Best Forex Broker Middle East
Royal Forex Trading S.A.L

Best Forex Broker Western Europe
Hantec Markets

Best Forex Broker Northern Europe
Saxo Bank

Best Forex Broker Southern Europe
Fx Pro

Best Forex Broker Central Europe
TMS Brokers S.A.

Best Forex Broker Eastern Europe
XTB

Best Global Binary Options Trading Provider
Nadex

Best Payments Systems
Markets.com

Best Vendor For Signals
esignal

Best Software Plug-ins
MetaStock

Best Active Trading Tools
Superderivatives

Best Chinese Language Brokers
Azurite

Best Post Trade Services
Deal Hub

Best Data Networking and Infrastructure Provider
BT Global Financial Services

Best Social Trading Network
eToro

Best Mobile Trading Platform
eToro

Best Trading Software Provider
eToro

Best Global Professional Trading Platform
Squared Financial Services Ltd

Best FX Order Management
Squared Financial Services Ltd

Best FX Global Execution Provider
Squared Financial Services Ltd

Best Algorithmic Providers
Flextrade

Best Technical Analysis Website
Ninja Trader

Best Portfolio Management
Beiley Software

Best Automated Trading Platform
FXCM

Best Dealing Room
GFTUK

Best Rebate Provider
TradersChoiceFX

Best Institutional FX Provider
QuantumFX

Fastest Growing FX Provider
Alpari (UK)

Best Islamic Forex Provider
TADAWUL FX Ltd

Most Transparent Forex Provider
MIG Bank

Best Affiliate Programme
Liteforex

Best Global Liquidity Provider
Commerzbank – Corporates & Markets

Best White Label Solution Provider
Saxo Bank

Best Trading Platform – Global
AVA FX

Best Trade Executions – Global
AVA FX

Best FX Newcomer
IronFX

Best Mini Forex Broker
FBS

Best Global FX Education Provider
LTG Goldrock

Best Dealing Room
Royal Forex Trading S.A.L

GCC Awards 2011

Best GCC Inward Investment Agency
Bahrain Economic Development Board (EDB)

Best GCC Outward Investment Company
Aabar Investments

Best GCC Private Equity Firm
Noor Financial Investment Company

Best GCC Asset Management Company
Jadwa Investment

Best GCC Shariah-compliant Investment Advisory Company
Muthanna Investment Company

Best GCC Conventional Investment Advisory
Bayan Investment

Best GCC Bond Issuer
International Petroleum Investment Company

Best GCC Fund Management Company
Kuwait Investment Company

Best GCC Securities Dealing Services
Taib Securities

Best GCC Development Fund
Saudi Fund for Development

Best GCC Real Estate Development Project
Baniyas Investment & Development

Best GCC Sport & Entertainment Project
Qatar World Cup 2022 Bid

Urban Planning Excellence Award
Abu Dhabi Urban Planning Council

Best GCC Tourism Development Agency
Dubai Tourism and
Commerce Marketing

Best GCC Industrial Development Company
Al-Tuwairqi Holding Company

Best GCC Hotel & Leisure Development
Action Hotels

Best GCC Free Trade Zone
RAK Free Trade Zone

Best GCC Infrastructure Development Project
Al Madina AZarqa (Blue City, Oman)

Best GCC Shopping Malls Development
The Dubai Mall

Best GCC Passenger Transport Development Project
Dubai Metro

Best GCC Air Cargo Company
Qatar Airways Cargo

Best GCC Airport Facility
Dubai International Airport

Best GCC Industrial Hub
ZonesCorp

Best GCC Holding Company
Kingdom Holding

The GCC Environmental Concern Award
Salalah Port

Major GCC Regional Philanthropist
Emirates Foundation

Power to the people

As discussed in previous columns, financial crashes have similar statistical properties as earthquakes, craters on the moon, and many other natural phenomena, in that they follow what is known as a scale-free, power-law distribution. This means in effect that there is no typical size or scale: only the rule that, the larger an event is, the less likely it is to happen.

For example, if you double the size of an earthquake, it becomes about four times rarer, so earthquake frequency depends on size squared, or size to the power two – hence “power law.” There is no such thing as a “normal” pattern, and there is the ever-present possibility of extreme events.

This may sound like depressing news. What is the point in planning for the future if we can’t know what it will look like? However, there is a flip-side, for it isn’t just financial disasters which follow a power-law. The same thing holds for financial opportunities. The distribution of company sizes, for example, is scale-free: there are many tiny firms consisting of just a few people at one end of the scale, and a handful of global behemoths at the other. Opportunities are constantly bubbling up from the bottom. Most go nowhere, but a few will become massive.

The inverse question to the risk of disaster, is therefore the possibility of outlandish success – the bio-tech company that invents or accidentally discovers a blockbuster drug, the rash entrepreneurial gamble that pays a million to one. These are events that don’t register in the ‘normal’ economy of mainstream economics, exactly because they are statistically unlikely. And yet it is just such extraordinary events that define the economy.

Who would think that a small hamburger restaurant could grow into a global fast-food chain, or that a new author could produce a huge bestseller? Such events always come as a surprise, which is why we should always be open to new opportunities.

Individual wealth also follows a power-law distribution, at least for the top 50 percent of the population. The graph to the right combines two sets of data. The solid line on the right is from a UN report on the world wealth distribution (I have excluded those with less than $10,000 because the power law breaks down beyond that point).

The UN data only extends up to the richest one percent of the adult population, ie those with about half a million dollars or more of assets. The world’s billionaires are shown by the solid line on the left. The difference in magnitude between these two data sets is obviously enormous, and one might think there could be no connection between a billionaire and the rest of the world. However, a feature of scale-free distributions, is that they appear as a straight line when plotted on log-log scale (on this scale, 104 is 10,000, 106 is a million, 109 is a billion, and 1011 is a hundred billion).

I have interpolated the missing data with a dotted line, but data from individual countries show a similar pattern, and it is reasonable to conclude that the power-law distribution holds remarkably well over this range. As with “extreme events” on the stock market, billionaires are not random freak events or black swans, but part of the same picture as everyone else.

Power-law distributions are ubiquitous in nature, and are the signature of complex systems which have evolved to the edge of chaos – they are neither completely ordered, nor completely chaotic, but are on the boundary between the two.

This points to a major problem in economic theory. Most mainstream ideas, including chestnuts such as the ‘law of supply and demand’ or the ‘efficient market’ only make sense if you assume that there are a large number of essentially identical consumers, investors and firms. Drop those assumptions, and the theories don’t stand up.

However, while power-law distributions cannot easily be accommodated by the tools of mainstream economics, they do come easily in the framework of agent-based models. These are an important tool in life sciences such as ecology and biology, and are increasingly being used to model the economy.

One of the earlier examples of an agent-based model was a kind of computer game called Sugarscape, which involves agents moving over an imaginary grid looking for sugar. The rules for each agent are simple. To stay alive, they need food, so at each time step, they look around them, move towards any sugar they see, and eat it. Like a crop, the sugar grows back, but slowly. The agents have diverse characteristics, so some can see further or move more quickly, and can also reproduce through a process in which a couple’s attributes are randomly mixed up to produce a new agent.

While the rules are simple, the emergent behaviour is quite life-like. The agents swarm around like ants, and soon organise into separate tribes based on the geographical distribution of sugar. The more successful find mates and start large families. Some become exceedingly well-off, and hoard their excess sugar. The wealth distribution is seen to follow a scale-free power law, just as in the real world.

The system can occasionally lapse back to a disorganised state of conflict, as when population pressures result in a sudden shortage of food. The program has been used to study everything from economics to warfare.

Sugarscape has been criticised by feminist economists as being design to reflect male values. As Hazel Henderson points out, “if they had programmed half of their ‘agents’ with the behaviour females so often exhibit… they might have produced different results.” As with any model of society, it reflects our own biases and beliefs. But perhaps one day more realistic versions of such agent-based models will help us understand how wealth is distributed in the economy – and even spread the sugar a little more fairly.

Energy Consultancy Awards 2011

Best Energy Consultancy in, Abu Dhabi
Schlumberger Business Consulting

 

Best Energy Consultancy in, Argentina
Orlando J. Ferrers & Associates

 

Best Energy Consultancy in, Bahrain
Ernst & Young

 

Best Energy Consultancy in, Brazil
LCA Consultores

 

Best Energy Consultancy in, Canada
Accenture

 

Best Energy Consultancy in, China
Noether Associates

 

Best Energy Consultancy in, Denmark
Cenergia

 

Best Energy Consultancy in, Dubai
Deloitte

 

Best Energy Consultancy in, Netherlands
Deerns

 

Best Energy Consultancy in, Norway
Noreco

 

Best Energy Consultancy in, Russia
Pace Global

 

Best Energy Consultancy in, Singapore
Air Energi

 

Best Energy Consultancy in, Spain
efisis

 

Best Energy Consultancy in, Turkey
ETRM Energy Trading & Risk Management Co.

 

Best Energy Consultancy in, UK
Poyry Energy Consultancy

 

Best Energy Consultancy in, USA
Booz Allen Hamilton

Carbonomics: The growth of a long term market

The 1997 Kyoto Protocol set in place targets for the reduction of CO2 emissions by participating countries by the year 2012. Following this, Europe developed a system whereby individual companies within each participating country have been allocated emission reduction targets based on  historical benchmarks.

Companies with emissions exceeding their benchmarks are short emission credits and have to source the shortfall in the market. Companies that under emit are free to sell these credits to other market participants. This mechanism is known as the Cap and Trade and has proved to be an efficient way of assigning the cost of pollution within an economy.

Since these credits are tradeable, the buying and selling of credits between businesses has given rise to a new market, the emissions market. As with any other market, trades are facilitated by intermediaries and liquidity providers. One of the largest players in today’s global market is CF Partners, a specialised environmental advisory and investments firm.

The founders of CF Partners are Jonathan Navon and Thomas Rassmuson. With more than 17 years’ experience in the US and European financial markets – most notably with Goldman Sachs, Deutsche Bank and Merrill Lynch – Jonathan’s main area of expertise is providing corporate borrowers with financial and liability risk management advice. This includes financial analysis, capital structure advisory, and risk management execution.

Thomas’s background is in investment banking and fund management. Before establishing CF Partners five years ago, he worked at Merrill Lynch managing the Nordic fixed-income business. Thomas also managed a $1bn trading portfolio as a chief trader at AGA, an industrial trading company, responsible for a large derivatives and hedging book for rates and FX. He was also part of setting-up NAC Capital, a $3bn credit hedge fund and partner at the venture capital firm MVI.

Thomas Rassmuson says, ‘Prior to establishing CF Partners, we had both principally focused on the client and origination side of the fixed-income markets. From this perspective, we could see there was a need for a carbon advisory and trading firm, focusing on the demand side of the emissions market.’

Jonathan Navon says, ‘We see CF Partners as an advisory and trading business with a focus on risk management. Our aim is to help corporates understand their carbon exposure and work with them to help mitigate this exposure which may, given the nature of the Cap and Trade system, be either an asset or a liability.’

CF Partners acts as an adviser to many buyers of carbon credits, such as sovereigns, utilities and industrial companies.  The firm also structures and trades OTC transactions among other buyers and traders of emission credits such as funds, banks and trading houses.

The company has four principal businesses: Emissions Advisory and Trading, Corporate Finance, Capital Markets and Fund Management.

I) Emission Advisory and Trading
CF Partners advises companies on ways to reduce hedging costs by  sourcing carbon credits directly from Clean Development Mechanism (CDM) and Joint Implementation (JI) projects; projects approved under the Kyoto Protocol to generate carbon credits. In order to achieve this, the firm draws on its in-depth CDM and JI knowledge, its strong global origination network, provides documentation and negotiation expertise, and works only on select mandates that offer high levels of transparency.

CF Partners also provides risk management services such as evaluating  CDM/JI portfolios, devising procurement strategies for sovereigns and corporates, and advising clients on the sale of carbon-related assets. To achieve these objectives, the firm ensures it has strong relationships with end-buyers of carbon credits and financial investors that seek exposure to this new asset class. In addition, CF Partners has worked on several landmark transactions in the emissions market, and has demonstrated expertise in structuring risk solutions for optimal compliance management.

II) Corporate Finance
CF Partners has leveraged off these relationships and expertise to provide corporate finance advisory services including mergers and acquisitions, strategic business review and asset divestures to clients across many industrial sectors, but with a general focus on the energy and renewables market.

III) Capital Markets
Recently, the firm has expanded its capabilities to arrange alternative funding solutions for project based transactions and offers innovative investment opportunities for investors seeking exposure to the emissions and renewable energy markets.

IV) Fund Management
In 2009, CF Partners launched CF Carbon Fund II which is the firm’s principal investment vehicle for participating in both the primary and secondary carbon markets.  To date, the fund has invested in 49 CDM projects totalling a contracted volume of 35 million of carbon credits. The fund trades a variety of carbon credit instruments such as EUAs, CERs, ERUs, AAUs, VER and CRTs, and has become a market maker in futures, options and swaps. In addition, CF Carbon Fund II is offering innovative funding structures such as repos and asset backed financing.

CF Partners was named Best Carbon Market Fund Manager and Best Carbon Markets Management Services for Northern Europe in the World Finance Carbon Markets awards 2011. CF Carbon Fund II has seen an increase in trading volumes through providing its clients with a secure trading platform which mitigates credit risk and provides the ability to pre-screen the carbon credits traded over the platform prior to settlement. In today’s difficult trading conditions, CF Partners has continued to prosper. Mr. Rassmuson says, ‘Whereas market trading has recently declined overall, our client base and market share has increased. This is because we offer a high degree of transaction visibility. As carbon trading specialists we give our clients the reassurance that we have the experience to best cater for their trading needs.’

Whereas the carbon markets are buoyant when compared with other sectors, they have nonetheless faced difficulties in recent years. According to an article published in the Financial Times in January this year, cyber-thieves have stolen as much as Euro 30m in carbon allowances from the EU’s emissions trading system (ETS),  the largest carbon-trading scheme in the world, with an estimated turnover of some €90bn.

Jonathan Navon says, ‘Whereas these thefts have impacted investor confidence, we should remember that it is still a nascent market, and there will always be teething troubles. Transparency, accountability and internet security are still an issue, but these will improve as the markets mature. Putting it into perspective, the fraud committed in the carbon markets has not resulted in anywhere near the losses experienced in other more established markets, such as the credit card market.’

Thomas Rassmuson adds that carbon trading and renewable energy are some of the solutions to address energy security and are leading to a more sustainable world. “We should not forget that carbon trading has been an overall success in transferring technology and financing to the developing world has led to an increased cooperation between countries, and has enhanced the understanding of the importance of the environment and conserving resources.”

Looking at grass-roots technology, the market is developing fast. Wind farms, solar and hydro power are some of the solutions to  long-term energy issues, and these projects are becoming increasingly backed by institutional investors and governments worldwide. To cater for this growth, CF Partners is developing new products such as fixed-income instruments and tradeable bonds linked to carbon and renewables, with the aim of opening up the market to new participants.

All told, there have been some initial concerns surrounding the carbon markets. However it must be remembered that, compared to other established markets, carbon remains a  relatively new asset class, but one with long-term ambitions and strong growth opportunities. And in contrast to many other asset classes, the carbon markets are actually delivering on their promises.

On fish and finance

However, the two fields of fisheries and finance do share certain properties. Their overseers are both charged with the management of complex ecosystems, either of different ocean species, or of different investor species. They each have to deal with sudden, apparently inexplicable crashes – in fish populations, or markets. And increasingly, they are adopting the same kind of approach to their work, based on systems science, of the sort championed by people like the ecologist Robert May.

While studying the behaviour of fish populations in the 1970s, May discovered that populations could boom and bust purely as a result of their internal dynamics, without any need of external shocks. Instead of trending towards equilibrium, as assumed by the conventional “balance of nature” theory, they were intrinsically unstable. His work helped drive the development of chaos theory. Today, though, his attention has turned towards a different kind of chaos – that of the financial markets.

As he pointed out in a recent paper in Nature, co-written with the Bank of England’s Andrew Haldane, one of the reasons for the credit crunch was because risk was assessed for individual firms rather than for the system as a whole. Risk metrics such as Value at Risk (VaR), for example, calculate the risk for a particular firm’s financial position, but don’t reflect systemic risk which results from the net action of all the firms. The result during the early 2000s was that systemic risk – in the form of ballooning credit – was allowed to accumulate. As individuals, banks were meeting their requirements, but as a system, the financial network was getting deeper underwater.

Until recently, fisheries management had a similar problem. It was performed on a single species basis, with catch limits determined according to population levels. This approach failed to prevent disasters such as the collapse of the Grand Banks fishery off the coast of Nova Scotia, Canada. It was soon realised that, because each species is just one link in a complicated food chain, it is impossible to assess the risk of collapse for any species in isolation. Instead, the entire eco-system has to be taken into account. The result was ecosystem-based fisheries management.

Clearly, financial regulators can learn much from fisheries management. As May told the Financial Times, “The more I hear about financial economics, the more I am struck by its similarity to ecology in the 1960s.” The time has come for a systemic approach to risk.

In 2007, a team of fisheries experts came up with a list of ten commandments for ecosystem-based fisheries.* In case it is of use for financial regulators, we here present the same list, along with the appropriate finance interpretation.

1. “Keep a perspective that is holistic, risk-adverse and adaptive.”
Risk measurement in financial systems is currently evaluated on a case-by-case basis for each institution. This gives little idea of the overall risk of the entire network. We should therefore supplement single-firm metrics such as VaR with adaptive techniques that adjust for systemic risk. For example, margin requirements and minimum capital requirements could be tightened during a boom, and relaxed during a bust.

2. “Question key assumptions, no matter how basic.”
That would include the assumptions that markets operate at equilibrium, or that people behave in a rational, non-fishy manner.

3. “Characterise and maintain ecosystem resilience.”
Banks should have sufficient reserves to pass stress tests which include the possibility of extreme events. Diversification is also important – though as May points out, it isn’t enough for institutions just to diversify their investments amongst different asset classes, they have to do it in different ways (otherwise there is no real diversity).

4. “Characterise and maintain the natural spatial structure of fish stocks.”
Robust ecosystems such as food webs tend to be built up of a number of separate, weakly connected subnetworks. The international finance system has become increasingly connected in recent years, and a degree of modularity could similarly make it more robust. One possibility is to structure global banks into national subsidiaries, so that if one part gets into trouble it won’t spread internationally.

5. “Identify and maintain critical food-web connections.”
Complexity scientists are starting to analyse the finance system to understand the relationships between different players and investment strategies, in the same way that ecologists monitor the interactions between species in an ecosystem. This should help identify the sources and indicators of systemic risk.

6. “Characterise and maintain viable fish habitats.”
In other words, don’t forget the real economy. No bottom-trawling or ripping up local habitats, as happened during the subprime crisis. And make the regulatory environment fair and transparent, so institutions feel happy and safe.

7. “Account for ecosystem change through time”
For example due to climate change. Regulations have to be constantly updated to keep up with both financial innovation, and with new markets such as carbon trading.

8. “Account for evolutionary changes caused by fishing.”
Just as fishing changes the composition of the ecosystem, so financial regulation changes the composition of the financial system. For example, restricting a particular financial product in too narrow a manner may result in a bloom of new but related products to fill the available niche.

9. “Maintain old growth age structure in fish populations.”
New products offering supposed benefits need to be scrutinised carefully before being adopted. Other critical industries (e.g. pharmaceutics, nuclear) only allow new technologies once they are shown to have demonstrable benefit without dangerous side-effects.

10. “Implement an approach that is integrated, interdisciplinary, and inclusive.”
Finally, be open to ideas and methods from other areas of science – such as fisheries management.

Islamic Finance Awards 2011

Best Asset Management Company
Muthanna Investment Company

Best Islamic Retail Bank in the World
Jordan Islamic Bank, Amman-Jordan

Best Takaful Provider
Aman Insurance Company

Best ReTakaful Provider
ACR ReTakaful

Best Sukuk Deal
Liquidity Management House

Best New Islamic Fund
Muthanna Investment Company

Best Sharia’h-Compliant Hedge Fund Service Provider
Shariah Capital

Best Islamic Finance Training Institution
ISRA, International Shari’ah Research Academy for Islamic Finance

Business Leadership & Outstanding Contribution to Islamic Finance
H.E. Shk. Dr. Khalid Bin Thani Bin Abdullah Al Thani, Chairman, Qatar International Islamic Bank

Islamic Finance CEO of the Year
Mr. Adeeb Al Sowailim, Falcom Financial Services

“The Mecca of the economist lies in economic biology…”

Since Marshall wrote those words a century ago, however, there has been surprisingly little integration between economics and other life sciences. Instead economics has continued to model itself after physics. The General Equilibrium Models favoured by policy makers, or the risk models used by banks, are based on a mechanistic framework which makes economics very different from fields such as biology or ecology.

Given the failure of these models to predict the recent crisis, one may ask if it is time for a different approach.

In the next few columns, I will argue that Marshall’s Mecca may yet be reached, but it will require some fundamental shifts in the way we study the economy.

While Marshall noted the relevance of biology, he did not pursue the metaphor very far. One reason was simply that mechanical systems were easier to analyse using the mathematics of the time. As he continued in the preface, “biological conceptions are more complex than those of mechanics; a volume on Foundations must therefore give a relatively large place to mechanical analogies, and frequent use is made of the term equilibrium which suggests something of a static analogy”.

In order to make progress, and inspired by the “rational mechanics” of Isaac Newton, neoclassical economists therefore made a number of simplifying assumptions. One was that a collection of people behave much like a single “average” person, so the macro picture could be built up from the micro level. Indeed, they argued it should be easier to predict the behaviour of a large number of people, because the individual peculiarities come out in the wash. A related assumption was homogeneity. For example the law of supply and demand assumes that there are a multitude of near-identical firms all in direct competition with one another.

Together with other assumptions, such as rational behaviour, these allowed economists to build up a model of the economy in which people or firms acted like inert atoms, deprived of any individuality. The law of supply and demand would then drive prices to Marshall’s static equilibrium.

While these assumptions may have seemed reasonable at the time, they have found less use in life sciences such as biology or ecology. For one thing, living systems show emergent behaviour, so the macro-behaviour cannot be predicted from a knowledge of individuals. An ant colony is not simply a larger version of a single ant. The reason is that ants do not behave as atomistic individuals, but are embedded in a complex social organisation, are in constant communication with one another, develop specialised roles, experience group dynamics, and so on.

Also, living systems are not homogeneous. Indeed, as Charles Darwin pointed out in his Origin of Species (1859), diversity, along with competition, is one of the drivers of evolution. If everything were the same, “survival of the fittest” would result in a draw and nothing would change. Similarly, it is diversity in the business world which explains why markets are often dominated by a small number of successful firms, instead of a large number of essentially indistinguishable firms as assumed by neoclassical economics. It also explains how the economy grows and evolves.

The result of this evolutionary process is not equilibrium, but a state of dynamic change and continuous adaptation. And while competition plays an important role, so does cooperation. Diversity means that people and firms can often do more when they function as part of a team, than they can individually. Ecological niches appear as a result.

All of this complexity poses something of a problem to conventional models, because it is no longer possible to make the simplifying assumptions of the physics-based approach. In recent years, however, a number of alternative mathematical techniques have become increasingly popular in the life sciences, and now seem poised to take over economics. These include areas such as nonlinear dynamics (studies systems that are far from equilibrium), complexity (emergent properties), and network theory (systems where elements are in communication).

A key tool is agent-based models, which are computer programs which simulate interactions between individual agents. In systems biology, the agents may represent proteins within a cell, or individual cells within an organ; in ecology, they might represent members of different species; in models of the economy, the agents typically represent people or firms. The behaviour of each agent is determined by a relatively short set of rules.

The program then simulates the interactions between the agents, which often results in emergent behaviour which is easy to recognise but impossible to predict from a knowledge of the individual agents alone. The models can represent the diversity and dynamism which make the system tick.

For example, models have been developed in which hundreds of simulated traders buy and sell stocks in an artificial stock market. Each of the trader “agents” has its own strategy, which can change in response to market conditions or the influence of other agents. Rather than settle on a stable equilibrium, prices are in a constant state of flux, and periodically experience booms or busts as investors flock in or out of the market.

Of course, such models will never be able to perfectly capture the behaviour of human beings. But one thing seems clear: there will be no going back to the mechanistic view which has so long dominated economics.
Predicting the future is never easy, but economist Frank Hahn may have got it right when he wrote in 1991: “I am pretty certain that the following prediction will prove to be correct: theorising of the ‘pure’ sort will become both less enjoyable and less and less possible … rather radical changes in questions and methods are required … the signs are that the subject will return to its Marshallian affinities to biology.”

Management & Consultancy Awards 2011

Best Management Consultancy Firm, Argentina         
Deloitte

Best Management Consultancy Firm, Austria            
PwC

Best Management Consultancy Firm, Belgium            
PwC

Best Management Consultancy Firm, Brazil          
Deloitte

Best Management Consultancy Firm, Bulgaria           
Ernst & Young

Best Management Consultancy Firm, Canada            
Ernst & Young

Best Management Consultancy Firm, Cyprus          
PwC

Best Management Consultancy Firm, Finland             
Deloitte

Best Management Consultancy Firm, Germany            
Ernst & Young

Best Management Consultancy Firm, Greece            
KPMG Advisors AE

Best Management Consultancy Firm, India                   
Douglas Management Consulting Pvt.

Best Management Consultancy Firm, Luxembourg               
Deloitte

Best Management Consultancy Firm, Malta                   
PwC

Best Management Consultancy Firm, Mexico                
Ernst & Young

Best Management Consultancy Firm, Netherlands               
Luminous

Best Management Consultancy Firm, Norway               
PwC

Best Management Consultancy Firm, Portugal                
PwC

Best Management Consultancy Firm, Russia                   
Roland Berger Strategy Consultants

Best Management Consultancy Firm, Saudi Arabia               
MSD Management Consultancy Firm

Best Management Consultancy Firm, South Africa             
Ernst & Young

Best Management Consultancy Firm, Sweden               
KPMG

Best Management Consultancy Firm, Switzerland                
Ernst & Young

Best Management Consultancy Firm, Ukraine                
PwC

Best Management Consultancy Firm, UK                   
The Berkeley Partnership

Best Management Consultancy Firm, USA                   
Deloitte

Best Tax Consultants, Argentina        
Mr Guillermo O. Teyeiro, Negri & Teijeiro Abogados

Best Tax Consultants, Austria     
Mr Niklas Schmidt, Wolf Theiss

Best Tax Consultants, Belgium      
Mr Thierry Afschrift, Afschrift

Best Tax Consultants, Brazil      
Mr Jose Mauricio Machado, Machado Assoiciados

Best Tax Consultants, Bulgaria        
Mr Borislav T. Boyanov, Borislav Boyanov & Co

Best Tax Consultants, Canada  
Ms Elinore Richardson

Best Tax Consultants, Cyprus        
Mrs Areti Charidemou, Charidemou & Associates

Best Tax Consultants, Finland         
Mr Johan Bardy, Bardy Rahikkala Law Office

Best Tax Consultants, Germany        
Dr Reinhard Pollath, Pollath & Partners

Best Tax Consultants, Greece        
Dr Tryfon J. Koutalidis, Law Office T.J. Koutalidis

Best Tax Consultants, India            
Mr S.K. Bansal, B.D. Bansal & Co

Best Tax Consultants, Luxembourg        
Mr Frederic Feijten, Oostvogels Pfister Feyten

Best Tax Consultants, Malta            
Dr Rosanne Bonnici, Fenech & Fenech Advocates

Best Tax Consultants, Mexico         
Mr Manuel Solano, Ernst & Young

Best Tax Consultants, Netherlands        
Mr Roelof Vos, VMW Taxand

Best Tax Consultants, Norway
Mr Aleksander Grydeland, PwC

Best Tax Consultants, Portugal        
Mr Fernando Castro Silva, Garrigues

Best Tax Consultants, Russia          
Mr Petr Medvedew, Ernst & Young

Best Tax Consultants, Saudi Arabia      
Dr Mohammed Dardeer, MSD

Best Tax Consultants, South Africa     
Mr Paul De Chalain, PwC

Best Tax Consultants, Sweden        
Mr Johan Siggeman, Sigeman & Co

Best Tax Consultants, Switzerland         
Mr Peter Vogt, Taxpartner Taxand

Best Tax Consultants, Ukraine        
Mr Anders Johansen, J&L Consulting LLC Ukraine

Best Tax Consultants, UK            
Mr Shakeel Mowla, The Berkeley Partnership

Best Tax Consultants, USA            
Mr Ian E.L. Davis, McKinsey & Company