Equities trading focus : Sellside connectivity : Michel Balter

Making the case for upgrading sellside client connectivity

Be28_CAMERON_Michel-BalterMichel Balter, Chief Strategy Officer for CameronTec Group, examines the business case for upgrading sellside client connectivity in today’s market climate. Operating successfully in today’s markets amid the harsh realities of shrinking returns and increasing costs requires firms to not only differentiate on service, but importantly to reduce the overall complexity surrounding their electronic trading environments.

In the past few years, there has been much focus around architecting and harmonising front office systems across trading desks and asset classes, in order to reduce the disparate silos and redundant technology that can undermine a firm’s long term profitability.

Significant cost reduction

Sellsides can significantly reduce operational costs by bringing their sprawling world of FIX under control and abandoning underperforming and poorly designed legacy systems. This is especially the case for aging FIX routing infrastructure. A large degree of this older FIX technology is designed around silos and represents a mass of dated, disparate systems that have been added over time.

FIX infrastructure technology for today should be optimally designed to really achieve greater business benefits. It needs to be horizontally designed to support a firm’s multiple sites, desks and asset classes, and it should be built on a powerful messaging-engine technology layer, in addition to highly adaptive systems for message routing, automated testing, monitoring, customer on-boarding and risk management.

Integrated and interoperable

An integrated solution will give sellsides the interoperable data they need to achieve sophisticated business insight. Designed correctly, upgrading FIX routing infrastructure can help firms optimise their operations, infrastructure and trading capabilities; significantly helping to lower operating costs and attract and retain clients with a dramatically improved customer value proposition and experience.

Historically, the fallback position for many firms operating within the financial services industry is to remediate issues with quick fixes. But with diminished profits and disappointing volumes, plus regulatory intervention inflating the cost of compliance, the only way up for the sellside is to invest in the right technology to deliver value.

Future-proofing

With neither the sellside or the buyside guaranteeing profit margins under current market conditions, firms with longer-term strategies, mandates and targets are now tasked with investigating technology that will future-proof their trading systems. Indeed, meeting regulatory requirements and addressing and implementing compliance fixes has pushed the capital markets industry into unchartered territory; signalling an unprecedented period during the era of trade automation for embracing solution and service innovation.

CameronTec Group recently spoke with market participants worldwide to put together a white paper summary examining the case for upgrading sellside client connectivity, and highlighting the conclusions:

  • Sifting through the explosion of complexity. As firms’ trading systems have proliferated, so too has the network of FIX infrastructure supporting these systems and today the result is a muddle of technology and aging infrastructure that is difficult to manage and costly to maintain.
  • Streamlining cumbersome, decentralised trading infrastructure. Decentralised trading infrastructure means firms have unnecessary duplication across their systems leading to higher costs and resource usage, and compromised client service.
  • Repercussions of Limited and Non-Invasive Testing. Outages leading to financial disasters are becoming more commonplace, and often the blame rests with lack of adequate testing.
  • Limited and Decentralised Monitoring. The decentralised nature of a sellside’s trading infrastructure often makes it difficult to gain a complete, real-time view of customer flow.
  • Inadequate infrastructure that lacks resilience. Many older FIX routing systems do not handle failures. For any serious firm, this alone is a show-stopper.

For a copy of the white paper report visit www.camerontecgroup.com/news/perspectives.

©BestExecution 2015

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