Category Archives: Market Data

Calling all buy-sides

Posted on by

Those on the trading front line have gotten wise in the art of managing the extortionate amount of data the financial market now throws at them. And let’s face it they had to: downgrades and debt crises, shrinking trade sizes, shorter windows for processing, pricing and reconciliation are just a few of the factors that have created more data to access, analyze and act upon.

However, as we highlighted on Tabb Forum recently, anyone who thinks this is a sell-side only problem is missing the point. Buy-sides, with their multi-broker strategies and their own alphabet soup of TCA, DMA, EMS and ECN, have been getting closer to the trade for years. What’s more, no regulator, auditor, investor or custodian is going to fall for the ‘broker ate my homework’ excuse – as choppy markets make compliance with client mandates that much harder.

Fund managers, like everyone else, need to make sense of and meaningfully use the increased information available to them and importantly understand the impact of sudden market movements on the shape of their portfolio – if only to make sensible decisions about which brokers are delivering alpha and which are relying on the reputation of their star traders. In these volatile times that show no respect for traditional institutions, counterparty risk stalks the markets and renders vulnerable everyone who does not have an accurate and immediate handle on the state of play.

So it’s time for buy-side firms to examine how data works for them and not just from a risk and compliance perspective but in terms of gaining a competitive edge too. If they don’t and their course is anything but smooth sailing, investors and regulators will no doubt be queuing up to find out why.

In-house and out of date, is your legacy solution facing extinction?

Posted on by

Legacy solution vs Build your own Financial firms remain at a familiar crossroads when it comes to the technology they implement: build something proprietary in-house or buy in a solution from sector specialists.

However, highlighted no more so than on this very blog, one of the things that differentiates the current position of financial services industry is the sheer amount of regulatory change taking place. On what sometimes feels like a daily basis, regulators change rules, adapt them, tweak them and, in some cases, create entirely new rules by which the entire industry must react and adapt to – or face the consequences.

For in-house technologists at these firms this presents a problem. Just like the Dodo, proprietary solutions must evolve to the changing landscape around them or face extinction. A Darwinist evaluation of in-house teams will reveal a graveyard of solutions which simply couldn’t stand the pace of the industry in which we work. Too often, the frequency of market, regulatory and client driven change adapt too quickly for such solutions to keep pace.

This situation, combined with the current and sweeping pace of change within capital markets is prompting many firms to now look more closely at the viability of their current operations at an application level.

The keyword here is future proofing. A great deal of IT and resource investment is spent on overly complex and expensive systems to address this issue. All too often such systems have been built in house are no longer fit for purpose and usually uneconomical and time consuming to maintain and expand  as new instruments come on board, as trading volumes increase and as factors change with the acquisition of new business lines.

So what’s the alternative? A vendor supported and maintained commercial product. But before diving into the vendor space, ask yourself what such a product must look like.

Obviously anything you implement must cover what today’s requirements – but your proprietary solutions are built with these requirements in mind. The question is, what might the future look like? For example, what asset classes might you be trading or what regulatory changes are coming into view on the horizon.

Stare into your crystal ball for a moment, you’ll need something that can integrate seamlessly and easily with a broad array of applications across your firm, scalable enough to meet current business needs and future performance requirements – which will differ according to the various consuming business units.

The industry is constantly evolving – if you’re technology isn’t prepared to do the same then you face a Dodo-esque future.