Mostly… fixed income and cross product eTrading

August 18, 2006

Customer tiering … on operational performance

Filed under: etrading, STP — holky @ 1:42 pm

The measurement of operational performance to rank your counterpart isnt a new concept for the buyside, as its an accepted and expected part of the dealer selection process. Consequently sellside expend a lot of effort to ensure their trading process overall stacks up well compared against their peers. At present this measurement is a one way street, but soon we will see buyside similarly incentivised to review their aged/mutated trading processes and even contractually agree maximum levels of human intervention in trade workflow, in order to secure the best price available on their trades.

Of course I don’t forsee a sellside stampede to dramatically worsen a “good” clients pricing just because they need a bit of hand-holding in their trade workflow, but a maturing electronic market and also current regulatory initiatives that are highlighting the importance and impact of transaction processing costs, and doing so without this appearing “just” a back-office issue, make it reasonable to expect the cost burden of “unnecessary” human intervention in customers workflow to shift back towards the buyside over time. After all, who can argue with those choosing to trade by voice rather than a cheaper electronic venue, or to manually amend 30% of their trades post-execution by paper rather than direct gui, paying more for the privilidge of doing so?

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1 Comment »

  1. “After all, who can argue with those choosing to trade by voice rather than a cheaper electronic venue, or to manually amend 30% of their trades post-execution by paper rather than direct gui, paying more for the privilidge of doing so?”

    Oh yes…the market has all kinds of participants…and logic surely doesn’t structure all systems…sometimes personalities and habits get in the way of efficiency…

    Great blog!

    Comment by catelong — August 21, 2006 @ 3:48 pm


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