Computer set to play financial markets

Having trounced the world's best human and digital chess players, Abu Dhabi's super-computer will be let loose on financial markets.

Champion chess computer "Hydra " at PAL Technology's office.

ABU DHABI // Having trounced the world's best human and digital chess players, Abu Dhabi's supercomputer is moving from the game board to the board room. The team behind the Hydra supercomputer, which can calculate 300 million chess positions per second, is developing financial applications for its 64-processor mainframe at PAL Technology headquarters. "We were very successful in playing chess before, but now we have the time to develop and use Hydra for financial forecasting, which requires a tremendous amount of processing power," said Muhammad Nasir Ali, the programme director. "This can be a really good tool for investors." Hydra was commissioned in 2003 by Sheikh Tahnoun bin Zayed Al Nahyan, an avid chess player, and took first place at the 2005 International Computer Chess Championships in Paderborn, Germany. Over the past year, the computer has been "hibernating" in an air-conditioned chamber at the PAL headquarters as financial experts from the New York Institute of Technology in Abu Dhabi feed it with a decade's worth of financial data. The result will be a new version of the program Sybil, named after the prophets of ancient Greece and Rome. But playing chess and playing the markets are very different games, said Abdul Khan, the project manager. In the financial arena, speed is paramount and seconds can mean the difference between gaining or losing millions of dollars. "We want our program to be the highest in speed. If it can forecast market volatility, it should act within a fraction of time and faster than any other standard program. Its reaction must be a minimum." Mr Khan said the project's goal was to give the machine enough "foresight" to anticipate apparently random market fluctuations, including such events as the current financial crisis. This, he said, would be "the final challenge". "But right now our Sybil is very young, so our plan is to have it work with the volatility of the stock markets and predict mostly in options and futures markets." It could take another two years before the computer could become a reliable tool for investors. Many commentators, including Warren Buffett, the US billionaire investor and philanthropist, have questioned the role of computers in the financial turmoil, stating that much of the debt at its root was amassed through the use of computer models. And when markets began crashing, thousands of auto-trading computers began selling stock automatically. As for when the machine would return to the world of competitive chess, its makers would only say they were still working on algorithms to update the program. "It's hibernating," said Chrilly Donninger, the Austrian mathematician who programmed the algorithms into Hydra. "The lights are still flashing on the machine, but that's all." The current world computer chess champion, the US program known as Rybka, two years ago became the only chess-playing entity to have ever defeated Hydra. But the Abu Dhabi machine has proven its mettle by check-mating plenty of Rybka's kings during recent in-house matches, according to PAL engineers. "We're developing a version of Hydra that can run on a normal computer and that you can buy and that anybody can play," Mr Ali said. "Once we feel it's ready, then we'll also start participating in more tournaments." PAL Technology is a subsidiary of the PAL Group of companies owned by Sheikh Tahnoon. [e-mail]