Mostly… fixed income and cross product eTrading

July 18, 2007

Dealing Systems Will Go Cross-Asset

Filed under: etrading, OMS / EMS — holky @ 5:58 am

Asset managers, investment banks and broker-dealers are losing revenue because their front office systems cannot handle the complexity of modern trading strategies, according to a TABB research report quoted in EFN. This says that the traditional structure of trading companies, with silos dedicated to particular instruments, “is slowly and surely disappearing” as the number of systems used diminishes.

Sellside companies are “beginning the process of aligning their businesses to reflect more accurately the needs of their biggest customers”, but the challenge is keeping pace with change. The report says the buyside is “approaching investing in a whole new way”, specifically that “They are using complicated, inter-related plans that expose them to securities outside of their traditional comfort zone, exploiting arbitrage opportunities across capital structures and achieving investment goals by using the most efficient financial instrument – or combination of instruments – to achieve the desired exposure, risk and reward.”

For this, desktop integration is the buyside traders’ top concern, ranking over liquidity or trading errors, according to Tabb, with the report saying it is the responsibility of the head trader to “balance all the desk requirements across the various silos” – relatively easy for smaller firms but becoming geometrically complicated for large sell side trading desks with multiple locations, multiple asset classes and multiple entrenched interests.

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1 Comment »

  1. It would be very interersting to hear of any buy-side firms actually doing this?

    Comment by Tulipomania — July 26, 2007 @ 4:01 pm


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