Scale of Market Quakes (SMQ) - The Olsenscale

The idea of the Scale of Market Quakes (SMQ) was born through the absence of a tool to objectively measure the impact of political and economic events on the financial markets. The development of the SMQ was inspired by the Richter Scale which measures the intensity of earthquakes. Financial markets are subject to seismic shocks caused by political, economic and other events. The SMQ which is computed on a tick by tick basis, measures the price impact of these events. It provides a clear metric of the relevance of events and contributes to reducing uncertainty of decision makers. The SMQ service that has been developed for the currency markets is part of a comprehensive global information system that Olsen is currently building.The SMQ is dedicated to Jorgen L. Olsen; the father of Richard Olsen, founder of Olsen Ltd. Jorgen was a physics professor at the ETH Zurich, who worked at the Olsen office on a part time basis after his retirement. He made a feasibility study for a first version of the SMQ in 1996 which was instrumental for the subsquent development of the SMQ and lead to a first publication.

Richard Olsen & Olsen Ltd

Richard Olsen was born and brought up in Zurich, Switzerland in a family of bankers and physicists. His main interest lay in studying Economics but his family members did not consider it a real science and encouraged him to study Law. Heeding their advice he acquired his Licentiate in Law from the University of Zurich in 1979 and then a year later his Bachelors from the University of Oxford in Philosophy, Politics and Economics. In 1980 he obtained his Ph.D. in Law from the University of Zurich. Later, while working at a bank Richard made a proposal to found a research company. At first he was encouraged to write a business plan but before submitting the plan the project was dropped. This was incentive enough for Richard to create his own company and pursue his plans on his own resulting in the birth of Olsen Ltd (formerly known as Olsen and Associates) in 1985.

From Olsen & Associates there evolved several companies; Olsen Ltd, Olsen Financial Technologies (co-founded with Rakhal Dave) and OANDA (co-founded with Michael Stumm). He is genuinely appreciative of the multifariousness and creativity of his work, which ranges from management and sales to research and writing; from teacher to philosopher.

Olsen Ltd; is a research and investment manager based in Zurich, Switzerland. Olsen Ltd provides managed accounts and third-party products, investing in currencies as a separate asset class or as an overlay to an existing currency exposure. They specialize in a branch of investing known as high-frequency finance where trading decisions are based on detailed observation and analysis of price evolution. Olsen Financial Technologies provides financial institutions and researchers with access to one of the world's largest databases of tick-by-tick prices. The company also offers comprehensive software tools to filter, store, and analyze market data. OANDA, on the other hand is an online 24/7 market maker for currencies offering a broad array of auxiliary services. The Scale of Market Quakes (SMQ) is Olsen Ltd's latest contribution to the financial world. It is an initial part of the Olsen Information System that the Olsen team is currently researching and working on.

According to Richard, the financial world is the nervous system of the global economy . He believes that the system has failed miserably and is sending out the wrong signals We have to overhaul the system and transform the markets into a functional nervous system that contributes to an efficient allocation of resources . With Olsen he looks forward to creating a sustainable society through social investment and risk management. Richard anticipates that In a year from now, governments will negotiate, how they can digitalize the financial markets, i.e. introduce real time settlement with second by second interest rate payments and introduce a programming language to fully digitalize contracts and financial instruments, including their collateral. The digitalization of contracts and financial securities is pre-condition for transforming the financial markets into a functional nervous system of the global economy .