Speakers: Mayank Gupta, SVP of Data, LPL Financial and Wren Chan, Senior Software Engineer, LPL Financial

1. networks and ripples:
how kaavio uses graphs to analyze
event propagation in financial markets
p r e s e n t a t i o n f o r n e o 4 j c o n n e c t i o n s / m a y 2 0 2 0

2. kaavio is an emerging fintech company
kaavio analyzes the ripple effect to uncover
opportunities and risks in financial markets.
Our lateral inference engine analyzes network
connections, making the hidden visible and
allowing us to access new opportunities.
We bring clarity to the complex global financial
system with a system that is scalable, accurate,
trusted and replicable.
Nobody does this more efficiently.
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3. kaavio's founding team combines financial and
technology expertise
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John Fleming, Founder & CEO
∕ 20+ years as institutional investor and technology entrepreneur
∕ Capital Group international investment team
∕ Focus on product design, customer applications and analysis
PK Nag, Chief Scientist
∕ 20+ years designing and building complex information systems
∕ Carnegie Mellon University PhD and associate researcher
∕ Focus on tech design, algorithm development, machine learning

4. the ripple effect
When news broke that the Soviet nuclear reactor had exploded, Alexander called. Only
minutes before, confirmation of the disaster had blipped across our Quotron machines...
“Buy potatoes,” he said. “Gotta hop.” Then he hung up. Of course.
A cloud of fallout would threaten European food and water supplies, including the potato
crop, placing a premium on uncontaminated American substitutes. Perhaps a few folks
other than potato farmers think of the price of potatoes in America minutes after the
explosion of a nuclear reactor in Russia, but I have never met them.
- Michael Lewis, Liar's Poker
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5. 5
kaavio reveals the ripple effect of events
in financial markets
climate
wildfires, floods
droughts, storms
sea level rise
operational
supply breaks
strikes, crises
security breaches
political
tariffs, sanctions
regulations
expropriations
pandemics
covid-19
containment
resurgence

6. the current approach:
human-centric analysis is slow, ad hoc, unscalable
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alert recommend

7. a graph-centric approach:
kaavio's system is fast, systematic, and scalable
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input output

8. kaavio navigates vast, complex interconnections to
provide relevant, actionable results
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9. If a major event occurs, can you act in real time?
Complex chains of companies and securities obscure risks and opportunities.
Do you have the clarity to see through it quickly?
If you can't, your portfolio is at risk.
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10. What happens if you can act in real time?
You hit the jackpot.
And Kaavio can help you get there.
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11. graphs give us a holistic view across asset classes
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Our system incorporates all of a company's
legal entities and securities.
This allows us to identify additional group
financial exposure across asset classes.
When the airline sector crashed in March, you
would have wanted to know that your shares
in an investment firm would be significantly
affected by the leverage on a company deep
in the corporate structure.
Private Equity
Firm
Holding
Company
owns
Airline
Acquisition
vehicle
Investment
Firm
bonds
shares
issues
holds
owns
owns
issues

12. graphs let us analyze supply chain risk
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Our system analyzes chains of connections.
This allows us to identify and measure
potential vulnerabilities in supply chains.
When Boeing's 737 MAXX crashed in Ethiopia,
tens of billions of dollars were erased from
financial markets.
The impact spread from Boeing through its
entire supply chain, impacting indirect
suppliers months later.
Senior plc
Lockheed
Martin
Boeing
supplies
supplies
Spirit
AeroSystems
supplies
supplies

13. graphs help us to detect credit deterioration early
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Our system analyzes the impact of financial
events on other players the financial system.
By looking at lending and supplier
relationships, we can identify credit
deterioration in a bank's portfolio before it
appears in conventional financial analysis.
For example, if a retailer defaults on a bond, a
property management company may be hit,
and a marketing company that supplies it may
be next in line.
Bank
Property
Manager
Retailer
leases to
lends to lends to
Marketing
Companysupplies

14. graphs are the perfect technology for our platform
“kaavio provides an integrated view vs. a fractured, ad hoc view.”
– portfolio manager, event-driven hedge fund
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“kaavio finds hidden dependencies that we wouldn’t find.”
– portfolio manager, global fixed income fund
“kaavio finds early, non-obvious indicators of a downgrade or default”
– portfolio manager, global insurance company

15. we combine graphs with other powerful technologies
extending human intelligence
∕ powerful, customizable algorithms
∕ compatible with existing systems and tech
∕ complements analysts + other professionals
data integration from multiple sources
∕ partnership with major data vendors
∕ diverse data types and sources
∕ global, multi-asset securities
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16. we envision a future in which
graphs play a central role in financial markets
The investment process will benefit from a platform that connect the dots for:
∕ standardized, core network analysis, including search
∕ extended capabilities, including scenario analysis and integration with quant analysis
∕ customized analysis to enhance firms' analytical capabilities
∕ real-time analysis, development and execution of trading strategies
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