Request complimentary report

Trading technology: keeping up with change

By Martin Nilsson
January 20, 2017
Share:

The build vs. buy debate has raged for decades now. Financial technologists know they must build to get the complete customization their internal customers demand. But they must buy if they are to make ongoing maintenance of cutting edge systems both an economic and a practical reality.

Keeping up with change in the global financial markets is more important than ever. Regulatory change, business change, operating model change; all mean that banks, brokers and trading firms can’t afford to stand still when it comes to trading technology. But a number of factors are conspiring to make keeping up difficult at best, and in some cases impossible.

Staffing is a major issue. A decade on from the first inkling of the oncoming global Credit Crisis, staff continue to be trimmed as firms focus on cost concerns. At the same time, the cost of finding qualified staff is rising, not least as competition from non-financial segments – think: Google, Amazon and the like – pushes up salaries globally. The US Department of Labor, for example, estimated the median cost of a computer design specialist last year at almost $90,000. Financial services specialization adds to the cost substantially, particularly in areas such as coding for trading firms.

This lack of staffing has a direct impact on project timelines. Many internal design build projects are delayed due to lack of human resource. Ongoing maintenance of mission-critical systems and adaptation to regulatory requirements takes priority. New functionality – underpinning new business – is taking a back seat to business as usual, or rather maintenance under pressure.

In the derivatives trading space, many firms are using vendor-supplied elements to supplement their internally built systems. But increasingly – given regulatory pressure, internal inflexibility and lack of resource – banks, brokers and trading firms are turning to their vendors to provide their entire trading infrastructure.

Key to this development is a drastic change in the approach to system architecture and design, including the ability for clients to access the vendor’s source code and development tools. Financial firms now have the freedom to tailor software to match their exact needs, just when they need it. This ‘buy and build’ model allows firms to benefit from the stability and ongoing development afforded by a vendor offering, while at the same time adapting the systems to fit their specific needs.

It’s a win-win situation that addresses the challenges of today’s fast-changing derivatives marketplace, and one that’s sure to take hold as firms look to move to their next-generation trading infrastructures.

Related Content

Systematic Internalisers: opportunities in a post-MiFID II world

Systematic Internalisers: opportunities in a post-MiFID II world

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

Why infrastructure testing is critical to your trading business

Why infrastructure testing is critical to your trading business

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

Trading infrastructure testing and why it’s important

Trading infrastructure testing and why it’s important

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

MiFID II: The implications for trading systems and infrastructure

MiFID II: The implications for trading systems and infrastructure

Risk & Compliance MiFID II marked a sea change in the approach to the handling of order, trade and transaction data. Rigorous new requirements around data capture, analysis, reporting and record-keeping made the communication of data a central theme in ensuring trading systems were MiFID II compliant, and connectivity – between external and internal systems, databases and processors […] August 14, 2018

Request TABB Group Report: Derivatives Trading Technology: Structural Complexity Driving Next Generation Demands.

Please complete the form to download this report.

By submitting this form, you acknowledge that data collected by us will be handled in accordance with our Privacy Notice.

Itiviti Talks

Get our view on global capital markets

Subscribe

Subscription successful

Thank you for subscribing!

Close window

Itiviti Talks

Get our view on global capital markets

Weekly email

    Trends in global capital markets from a technology perspective.

By submitting this form, you acknowledge that data collected by us will be handled in accordance with our Privacy Notice.