From the kitchen table in his Upper West Side brownstone, Michael Dubno recently scratched out from memory the blueprint for the modern Goldman Sachs Group Inc.
The sketches, dashed out on a yellow legal pad, more or less match what Dubno drew on a white board 25 years ago, in a dusty corner office on the fifth floor of Goldman’s
old downtown headquarters: a schematic for a software database that would help the investment bank make billions of dollars in well-timed trades, and sidestep billions more in losses.
Called Securities DataBase, or SecDB, the system remains Goldman’s prime tool for measuring risk and analyzing the prices of securities, and it calculates 23 billion prices across 2.8 million positions daily. It has played a crucial role in many of the seminal moments of the firm’s recent history, including its controversial trading just ahead of the financial crisis.
Goldman had guarded it closely, resisting offers from rivals such as Deutsche Bank AG to license the database. One former partner recalls huddling with Gary Cohn, one of Goldman’s top executives, a decade ago to ponder what a licensing deal would be worth. Cohn told his colleagues he wouldn’t do it for $1 billion. For $5 billion? Maybe, he said, according to the former partner.
“It was such a competitive advantage.”
There is perhaps no better sign of the changes that have engulfed Wall Street than this: Goldman has recently started giving clients the tools that made it a trading powerhouse, for free.
An expanded version of this article appeared on wsj.com.
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View more information: https://www.marketwatch.com/story/goldman-sachs-has-started-giving-away-its-most-valuable-software-2016-09-07-71034235