To buy or not to buy — that is the question in financial technology. Or at least it has been for a very long time. The arguments for building in-house have remained constant and include the need for performance and the quest for differentiation (such as customized trading strategies). At the same time, time-to-market, complexity and – most obviously – cost, were key arguments for buying. But what if there was a third approach: buy and build?
All of the arguments for build and buy respectively still have merit, but we believe that their respective weights have shifted over time, effectively making in-house development an even more exclusive option. The most significant driver behind this shift is the advance of technology and a more flexible approach to trading system design.
High-speed trading connectivity has been a major advantage for the past several years. But as low-latency infrastructures become a mainstream capability, the cost of generating incremental speed has become prohibitive, and market participants are seeking new ways to differentiate their activities.
Firms are seeking to add value to their trading systems, while maintaining the high-speed connectivity they need to remain competitive. To accommodate new capabilities – in the form of pre-trade analytics, risk controls and post-trade clearing intelligence – trading firms across the board are re-evaluating their systems.
A higher level of trading system flexibility based on modern system architecture and the use more open technologies, means that smaller players can start to add unique functionality where before they were constrained by resource to use of vanilla third-party systems with little scope for differentiation.
A modern trading system such as Tbricks by Itiviti allows clients to choose freely from a library of business logic (we call this apps) for a completely customized experience. Combined with access to the source code and the tools required to make changes, we believe that the gap between buying and building is significantly reduced. Indeed, we believe that the classic buy vs. build now includes a highly competitive third option: a combination of the two.
In Itiviti’s whitepaper “Buy and build: A Blueprint for a Modern, Agile Trading System”, we explore approaches for creating a trading platform that is flexible enough to satisfy the changing needs of traders, powerful enough to deliver the analytics that provide better informed trading decisions and fast enough to satisfy client needs for performance and regulator expectations of trade visibility close to real time.
Execution In the months following the implementation of MiFID II, we have seen and will continue to see a number of Systematic Internalisers (SIs) appear on the market – some of their own volition, some following ESMA’s publication of benchmark data and thresholds. What we have seen is that many of these SIs started off by […] September 18, 2018
FIX Infrastructure End-to-end testing of trading infrastructure is critical in today’s increasingly heavily regulated environment – but compliance comes at a price. So why should financial firms pay it, and what happens if they don’t? In our second blog post on the topic, we explore the most pressing reasons to implement a robust testing mechanism. The most […] September 11, 2018
FIX Infrastructure As trading processes become ever more sophisticated and regulators race to catch up, the end-to-end testing of trading infrastructure is an increasingly crucial component of compliance. Financial services firms face severe penalties for trading errors – including fines, loss of reputation, potential bankruptcy and even personal repercussions for senior executives. The cost of failure is […] August 21, 2018
Trading Forex trading is increasingly influenced by and synchronized with equities. With this trend come new opportunities and challenges for Forex market participants. The trading styles and tools traditionally used for Forex are converging with other asset classes, enabling multi-asset and true cross-asset trading, and presenting an opportunity to consolidate and streamline trading technology. Download the […] August 7, 2018
By submitting this form, you acknowledge that data collected by us will be handled in accordance with our Privacy Notice.