Intelligent training with a fitness shirt and an e-bike

The FitnessSHIRT reads out physiological signals like pulse and breath continuously when worn. The interpreted data can be viewed on a smartphone or tablet PC, for example. Credit: © Fraunhofer IIS

Fabric manufacturers are experiencing a revolution at present: if clothing previously offered protection against the cold, rain, and snow, the trend now is toward intelligent, proactive, high-tech textiles like self-cleaning jackets, gloves that recognize toxins, and ski anoraks with integrated navigational devices to make life easier for those wearing them.

Most clever clothing is only at the prototype stage. It is by no means off-the-rack yet. Soon the FitnessSHIRT from the Fraunhofer Institute for Integrated Circuits IIS in Erlangen, Germany, will be ready for the mass market. It continuously measures physiological signals such as breathing, pulse, and changes in heart rate -- metrics of adaptability and stress load. The intelligent sports shirt is expected to be available sometime in the next year, as an investor is already on-board.

Smart electronics are hidden in the material

Conductive textile electrodes integrated into the shirt's material capture the wearer's cardio activity. In addition, an elastic band around the upper body senses the motion of the chest during breathing. A removable electronic unit attached with snaps digitizes the raw data and calculates additional parameters like pulse rate or breath rate with the help of algorithms. The data are transmitted via radio link to a smartphone or optionally to a PC, where they are evaluated further and can be stored. These parameters form the basis for judging vital functions like stress, performance, exertion, or relaxation.

"The FitnessSHIRT can be employed a number of ways. It offers completely new options for the pursuit of sports, leisure activities, and wellness, as well as options for the medical branch," says Christian Hofmann, an engineer at IIS. For example, it could act as a training partner to provide seniors or rehabilitation patients with feedback on their vital signs during exercises or bicycling, and protect them from overexertion. Athletes will also benefit: for one thing, the SHIRT is more comfortable to wear than a chest strap. For another, the integrated sensors deliver more detailed information. Besides pulse and respiration, accelerometers sense the movement of the user and carry out an analysis. "If the pulse rate is high, for example, while the breath rate and the exercise activity is low, it could be a sign of possible heart problems," according to Hofmann.

The developers of the MENTORbike are also persuaded by the high degree of comfort when worn and the possibilities for performance diagnostics. MENTORbike is a new type of training device consisting of a pedelec, a smartphone, and an intelligent user service site on the internet. The project partners, led by BitifEye Digital Test Solutions, want to use the pedelec in combination with the FitnessSHIRT from IIS in future. The SHIRT will have a wireless connection via smartphone to the pedelec and the user service site on the internet, where the data can be viewed, analyzed, and documented. The smartphone mounted on the bicycle handlebars collects the vital parameters it receives like pulse and breath rate as well as the physical data, for instance the energy expended and the speed, analyzes them, and cuts in the electric motor as needed.

"If the pulse rate exceeds a maximum value of 150, for example, the rider is supported by the motor taking some of the load. If the pulse rate falls below a value of 80 beats per minute, the electric motor is throttled back and the pedal loading increased again. The motor output adapts automatically to the fitness of the cyclist," explains Markus Gratzfeld, an engineer with BitifEye. In this way, users are assured of an optimal level of training at all times, with neither over- nor under-exertion. Rehabilitation patients, especially persons with cardiovascular disease, could monitor their performance limits better, exercise more confidently, and increase their range of movement.

Source: Fraunhofer-Gesellschaft

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Study of brokers' potential conflict of interest in routing limit orders leaked to Wall Street

A new academic paper about potential conflict of interest in large retail brokers' routing of limit orders has stirred controversy on Wall Street and caught regulators' attention -- even before the paper has been submitted to a journal.

While some in the industry have compared the study's possible impact to an earlier one that reformed Nasdaq trading, the authors caution that the paper is not yet final and the findings should be taken in proper context.

The authors, professors at Indiana University's Kelley School of Business and the University of Notre Dame Mendoza College of Business, found that some large retail brokers regularly route clients' limit orders to the exchange that pays them the highest rebates. Under certain circumstances, this can lead to some clients' trades not being executed at the best possible times -- or not being executed at all.

"Certain brokers, led by Ameritrade and including E*Trade, Scott Trade and Fidelity, were bifurcating the order flow -- sending market and limit orders to different exchanges -- but seemed to send all their limit orders to one place," said Robert Jennings, the Gregg T. and Judith A. Summerville Professor of Finance at Kelley.

"Brokers were paid for almost every order received; the conflict of interest occurs because some exchanges will pay brokers more to route limit order flows there, even if the chance that the limit order gets executed is lower on that exchange than somewhere else."

U.S. equity exchanges typically charge traders taking liquidity -- such as market orders -- and pay traders making liquidity -- such as limit orders. The payments, or rebates, are funded by take fees, so exchanges with the highest liquidity rebates also have the highest take fees. Brokers can generate revenue from customers' order flow.

According to the paper, "Can Brokers Have It All? On the Relation Between Make Take Fees & Limit Order Execution Quality," study results also indicate that, under some market conditions and for certain stocks:

-- Fill rates for displayed limit orders are lower on exchanges with higher fees. -- Limit orders executed on venues with high fees take longer to execute than those with low fees. -- On average, limit orders executed on venues with low/negative take fees are more likely to fill at the most opportune time for the limit order customer.

"Our results suggest that order routing decisions have an important impact of at least some measures of limit order execution quality and routing decisions based primarily on rebates/fees appear to be inconsistent with best execution," Jennings said. "Even if fees/rebates are passed directly through to the investor, the decision to use a single venue that offers the highest liquidity rebates does not appear to be consistent with the objective of obtaining best execution."

Paper leaked to financial community; FINRA asks brokers for data

The authors presented the paper to relevant industry representatives, including several brokerages, the Securities and Exchange Commission and the National Association of Securities Dealers. This common practice is generally accepted by all parties to be a confidential forum to test and refine study hypotheses and findings.

However in this case, the paper was leaked to the broader financial community without the authors' knowledge or permission. This led some to suggest the paper's impact could equal that of a 1994 study by Bill Christie of Vanderbilt University and Paul Schultz of Notre Dame showing implicit collusion among Nasdaq market makers; it led to sweeping reform of Nasdaq market (and a billion-dollar legal settlement).

The paper's leak -- and the Financial Industry Regulatory Authority's subsequent request for routing data from the 50 largest brokers -- has the authors concerned that the findings about brokers' maximizing liquidity rebates might be oversimplified.

Routing limit orders to maximize make rebates reduces fill rates, produces less profitable limit order executions -- and might be inconsistent with a broker's fiduciary responsibility to obtain best execution, the authors concluded.

"This is a classic case of adverse selection. If there's really bad news about the stock, everybody gets filled. If there's good news about the stock, then only the places where the order gets filled first get filled," Jennings said. "We are not alleging that the use of such rebates is illegal or that it violates securities laws, but there is a need for further transparency for consumers."

The authors expect to publish the revised and final version of the paper in the near future, after incorporating feedback they received.

"Given the competitive nature of the retail brokerage business, if brokers can get exchanges to pay for their orders, they could charge lower commissions," Jennings said. "Thus, customers may be slightly better off; if the payment was eliminated, commissions might have to be higher."

Commissions may be based on the total revenue that brokers receive, "but lower commissions do not compensate those investors who miss out on profitable limit order executions," Jennings and his colleagues concluded. "Brokers cannot have it all."

Jennings co-authored "Can Brokers Have It All?" with Robert Battalio, a professor of finance; and Shane Corwin, an associate professor of finance, both at Notre Dame. Battalio earned his doctorate at Kelley.

Source: Indiana University

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