Given the market’s changing dynamics – heightened regulatory scrutiny, advancing technologies and an ever more complex marketplace – what do trading firms consider to be the most important attributes when considering solutions for their next-generation trading technology stacks?
A recent TABB Group survey of 72 buy-side, sell-side and proprietary trading firms that are active in the global derivatives markets asked what factors were important to technology buyers. But before we consider the answers, it’s worth noting that without flexibility and agility to respond to client’s needs any supplier’s solution is effectively a non-starter.
Traders are constantly looking to be the first to discover and deliver on new business opportunities. For success in these endeavours, they need access to new markets, new products and new trading platform functionality. They need to deal with the latest edicts from their regulator, make use of new functionality on the fly and respond in real time to client requests. They want first-mover advantage.
Historically, trading firms have built their own platforms to ensure they exploited this first-mover advantage. But with internal IT staffs under pressure, firms are increasingly taking a best-in-class approach, farming out part or all of their trading technology needs to trusted suppliers who enable them to quickly respond to changing functional needs. They need to be able to plug these vendor solutions into their existing infrastructures, quickly and with little fuss. And only the most flexible and agile suppliers will be considered.
Assuming your supplier makes this flexibility grade, what are the key attributes the marketplace considers when looking at third-party technology providers that can help them create a successful trading platform?
According to the TABB survey, client support reigns supreme. Customer support was identified by 50% of survey respondents as the No. 1 consideration when looking at third-party trading technology. But respondents wanted more than just someone to call in a technology crisis. They wanted to be fully apprised on how to navigate ongoing changes to the trading platform. They wanted their trading desks educated on how to use a new module to access a new execution venue or trade a new product.
This need for constant client interaction was far ahead of the pack when it came to customer needs. Next came Connectivity (with 38%), Compatibility with other systems (37%), Ease of implementation (37%), High availability (34%), Breadth of product suite (33%) and Technology advancement (32%). Closing out the field, perhaps surprisingly were Data security (with 19%) and Financial strength of the vendor (12%).
The survey result suggests that it’s not enough for the trading platform simply to be functionally and technologically advanced. To succeed, trading firms need ongoing support. They want help with implementation and cost management, and with the never-ending checklist of regulatory items, like rule interpretation, rule translation, programming and reporting. Partnering with a supplier that can bear some of this load can help firms focus on business priorities rather than dealing with compliance and regulatory minutia that can distract from their core activities.
By submitting this form, you acknowledge that data collected by us will be handled in accordance with our Legal and Privacy Terms.
Blog With MiFID II regulation now less than 12 months away, the race to ensure compliance heats up. In a recent letter penned by Steven Maijoor ESMA Chair, Mr Maijoor expressed concerns on the “potential establishment of networks of Systematic Internalisers (SIs) to circumvent certain MiFID II obligations.” The implementation of MiFID I saw the introduction […] June 13, 2017
Blog It was a pleasure to have an opportunity to speak at the 2017 Americas Trading Briefing, which was graciously hosted by Goldman Sachs. As usual, the room was filled with more than 250 senior market participants and 25 expert speakers to discuss important topics, trends and issues we face together as the FIX Trading Community. […] June 7, 2017
Articles & Reports In recent years, exchange-traded funds (ETFs) have seen phenomenal activity and growth. Regulation, product innovation and investor appetite have driven global Assets under management (AUM) to record levels, while also fueling increasing market structure complexity and straining trading platform capabilities across the board. Itiviti, in conjunction with GreySpark Partners, recently engaged in a comprehensive review […] May 18, 2017
Automation & Testing For many sell-side firms, client onboarding and certification is a drag on productivity. The traditional methods used to perform these processes are manual, and therefore time-consuming. Because the process is so labor intensive, some firms maintain substantial backlogs of clients waiting for connections to trade. Slow onboarding is costing the business, as it leads to […] May 2, 2017