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LONDON/BOSTON (Reuters) - If you work for a bank, a computer may be reading your e-mails, listening to your phone calls or analyzing chat conversations as you type.

Even banking workers used to the idea of surveillance might balk at the thought of a computer doing the job.

But there are strong prospects for the software niche, as banks try to keep a much closer eye on staff in the wake of scandals such as Jerome Kerviel's rogue trading at Societe Generale, or the aggressive rumor-mill that undermined banks including HBOS and Bear Stearns.

“With the credit crisis and so on, people started to be much more careful,” said Ruggero Contu, principal research analyst at information technology consultants Gartner.

Known collectively as e-discovery, these technologies are booming despite a slowdown in other areas. Gartner forecasts the segment will generate $760.5 million in revenues this year, up from $524.5 million in 2007.

The systems to record and monitor employee activity can help companies collect huge amounts of internal information — which they may increasingly need in the face of lawsuits spawned by the subprime crisis, or to meet rising regulatory demands.

U.S. politicians are demanding tougher rules in the wake of the collapse of the once red-hot housing market, while the 2002 Sarbanes-Oxley Act on corporate accounting and investor protection has already spawned hefty legal requirements.

“The overall tech base is under pressure on the back of the credit crunch but there are a few niches, for example the e-discovery space, which may benefit from the regulation,” said Josep Bori, technology sector analyst at Deutsche Bank.

Banks are cutting non-essential spending and laying off staff to make up for losses and a slump in business. But spending on e-discovery bucks the trend.

“The one and only area where delays or cancellations are not happening is the regulatory and compliance. There's no way to avoid compliance,” said Stephane Gregoire, a product management director at Brussels-headquartered FRSGlobal, which supplies regulatory reporting tools to top banks.

WALLS HAVE EYES

An obvious potential winner identified by Deutsche among others is Anglo-American Autonomy Corp Plc, founded by Cambridge University researcher Mike Lynch. He said it was an Autonomy system that detected that mails created by Kerviel to support what he was saying had not been sent.

The company, with forecast revenue of more than $480 million this year according to analysts polled by Reuters Estimates, sells search technology that can understand e-mail, text, voice and video data. The stock has outperformed the FTSE index by more than 50 percent over the past year.

“The effect of the subprime crisis appears now to be a positive for our business,” said Lynch. “This is all being driven by trading scandals and by the sharpening of requests from regulators.”

Many companies maintain the right to monitor an employee's electronic correspondence using company property: in Britain, for instance, this is allowed if staff are informed and “the benefits outweigh the risks to individuals' privacy,” according to the British Information Commissioner's Office.

The problems the software can help resolve can be costly.

Kerviel was blamed for a 4.9 billion euros ($7.7 billion) loss at Societe Generale. In March over 3 billion pounds ($6 billion) was wiped off the value of British bank HBOS in less than an hour after some traders spread false rumors it had problems. Bear Stearns ended up being taken over.

Credit Suisse blamed a handful of traders for a multi-billion dollar loss, saying they had deliberately mispriced complex credit products.

Such mishaps, including wrong-footed bets on high-risk home loans, have put internal security and data management high on banks' agendas.

“Subprime brought that to a head,” said David Paris from the financial markets consulting unit of IBM. “Rather than saying 'strategically we need to go in that direction but don't want to invest now', (companies say) 'oh gosh, we need to do that'.”

MESSAGE MONITORS

Kailash Ambwani, CEO of FaceTime Communications, a privately held U.S. company whose software helps companies monitor instant messaging traffic and whose customers include many major banks, said SocGen had boosted interest in FaceTime's technology.

In February, he was recalled to New York from a ski holiday in Lake Tahoe to pitch to executives of two top banks which weren't yet customers: “We had been talking to them, and what this event did was to cause an acceleration in the process.”

Another U.S.-based instant messaging specialist also reports fresh interest. Akonix technology archives and monitors instant messaging conversations in real time, sending alerts on certain key words or names or number combinations.

The company says it has in the past six months gained two new clients, which are among the top three or five U.S. brokerages.

“It's not new regulations that have caused an up-pick in interest, it really is incidents like Societe Generale … where communications were used to do illegal activities,” Akonix's head of marketing Don Montgomery said.

And the industry is also attracting some employees who have first-hand knowledge of how to beat the system. French software company LCA said in April it had hired none less than the former SocGen trader Kerviel.

(Additional reporting by Rebekah Curtis and John Bowker; Editing by Douwe Miedema and Sara Ledwith)

NEW DELHI (AFP) - Merger talks between India's biggest mobile phone services firm, Bharti Airtel, and South Africa's flagship MTN Group could wind up this weekend, a report said on Saturday.

Bharti and MTN, Africa's biggest cellular operator, were putting finishing touches to a funding structure for the proposed merger, India's Mint newspaper reported, quoting unnamed people who it said were close to the discussions.

A Bharti official declined to comment on the report.

A merged group would create the world's sixth largest mobile company with a network of 130 million subscribers — 68 million from MTN and 62 million from Bharti — that would dominate two of the world's fastest growing cellular markets — India and Africa.

Johannesburg-based MTN may have to be valued at up to 50 billion dollars, or 25 dollars a share, including debt — about 25 percent more than its current stock exchange value for a deal to be struck, analysts say.

MTN, whose shares have soared since the merger talks were confirmed by the two companies on May 5, has net debt of around 2.9 billion dollars.

Bharti's shares have dropped seven percent since the discussions were announced amid concern the transaction could strain its balance sheet.

Indian newspapers have been reporting for days that Bharti's negotiations with MTN were at a crucial phase.

Bharti might offer the chairman's post of the proposed merged colossus to MTN group chairman M.C. Ramaphosa to sweeten its overtures, India's Business Standard newspaper said on Friday.

Bharti's billionaire chairman Sunil Mittal would be deputy chairman and group chief executive officer while MTN chief executive officer Phutomo Nhleko would be deputy group CEO, the paper reported.

Bharti has said “discussions being held are aimed at combining the strengths of two players from emerging markets” and that it was looking at “possible structures to achieve this objective.”

Bharti wants to acquire a 51 percent stake. But MTN, which serves 21 markets across Africa and the Middle East, is pushing Bharti to buy out 100 percent of the company in a transaction that could be portrayed in South Africa as a merger of equals, reports said.

If it goes ahead, the deal would easily eclipse Tata Steel's 13.7-billion-dollar takeover of Anglo-Dutch steelmaker Corus last year, India's biggest foreign acquisition so far.

However, a deal could hit Indian regulatory hurdles as foreign ownership in the new merged group might exceed the allowed 74 percent, reports said.

MTN wants half the merger to be carried out through a share swap, the Times of India reported.

But any new share issue by Bharti to complete the transaction could hike the foreign stake in the Indian company to as much as 78 percent.

Foreign investors, including Singapore's SingTelNet, already hold 65 percent of Bharti.

ROME (AFP) - Italian authorities are probing fashion designers Dolce and Gabbana,creators of luxury items ranging from clothes to beachwear, sunglasses, jewelry and mobile phones, for alleged tax evasion, a report said Saturday.

Milan tax officials claim Domenico Dolce and Stefano Gabbana set up two front companies in Luxembourg to conceal earnings of 260 million euros (404 million dollars) and thus pay less tax in Italy between 2004 and 2006, the La Republica reported without quoting a source.

They couple, who are widely considered two of Italy's richest people, had no comment on the report when asked by the Italian news agency ANSA.

According to figures published online by the finance ministry, each earned some 29 million euros in 2005 and each paid more 12 million euros in taxes during that period.

The designs of their fashion house Dolce & Gabbana are popular in celebrity circles.

It's not a typical enterprise data warehouses story, but then NYSE Euronext (NYSE), the parent company of the New York Stock Exchange, is not a typical enterprise. For one thing, NYSE has not one but three warehouses, each approaching 100 terabytes. Then consider NYSE's queries, some of which interrogate more than 40 terabytes of data. The extreme data volumes and extreme query complexity led to an upgrade onto data warehouse appliances.

After a period of rampant growth and mergers with two smaller exchanges, NYSE knew its large and aging Oracle data warehouses needed replacement. After exploring alternatives in 2006, the company concluded a successful 45-day proof-of-concept project on a Netezza Performance Server (NPS) appliance in early 2007. The main warehouse for the New York Stock Exchange was migrated within two and a half months and went into production in May 2007. A second device, consolidating what had been two separate warehouses for the Chicago-based Arca Equities and Options markets, went into production in July. Yet another warehouse, one housing legacy data, will be migrated onto a third Netezza NPS.

The NYSE and Arca warehouses primarily support market surveillance, monitoring trade patterns and behaviors to ensure compliance with the rules of the exchanges, and these queries can be quite complex. “It's very possible that we could hit 40 to 50 terabytes of data in a single query,” explains Steve Hirsch, chief data officer.

One of NYSE's more complex queries took 26 hours on the old platform, but it now takes just two and a half minutes on NPS, says Hirsch. The warehouses also support simpler queries for pricing analysis, load and capacity planning, and analysis of behavior across trade types and product types. In one example, a simple (though still high-volume) query that took seven minutes on the old platform now takes five seconds. While Hirsch describes both the New York Stock Exchange and Arca warehouses as “enterprise data warehouses,” with complete, unaggregated data, it should be noted that they're query-volume and user-volume demands don't compare with many large warehouse deployments. The number of queries per day tops out at “hundreds per day” (versus thousands on even tens of thousands on a high-demand EDW) and the user community tops out at 150 per appliance, with only 20 concurrent users on each device at any one time.

“We're not massive in terms of our user base, but we're pretty big in terms of the types of analytics and the time span of data that a single query might hit,” says Hirsch.

Competitors and some analysts say Netezza's NPS is not well suited to mixed workloads and large user communities, but Netezza counters that one of its largest customers, Michael's Stores, has 600 and 22,000 queries (the user figure is by no means extreme, while query complexity and frequency is more telling than the sheer number). Between the two appliances now in production, NYSE captures and stores about one terabyte of new trade data per day on the warehouses, much of it through near-real-time (minute-to-minute) trickle feeding. Having two separate appliances offered advantages in loading performance. Despite rapid data growth rates in access of 100 percent per year at NYSE, Hirsch says the company is well prepared to scale up. NYSE was a beta customer for Netezza's recently announced Compress Engine software, a firmware upgrade that effectively doubled the capacity of existing NPS devices in the field. Hirsch confirms that the upgrade has improved rather than degraded performance, as is sometimes the case with compression technologies.

“The main benefit was 2.2 to 2.4 times compression, which has more than doubled our capacity, but load performance has doubled and query times have also improved,” he says. “Non-computational queries — those that simply require access to day — have doubled in speed, and we're seeing improvements of 10 percent to 30 percent for queries that are CPU-intensive.”

Hirsch says he can't detail future scale-up plans, citing a non-disclosure agreement with Netezza, but he concludes that “disk drives are getting bigger and Netezza's Compress Engine only works on numerics today, so there are lots of opportunity for future upgrades.”

See original article on InformationWeek.com