The right partner
14 July 2017
Proven technology, business and technical expertise, customised solutions and frequent software updates aligned to market changes are among the traits of a successful IT vendor. Laura Allen of Trading Apps explains
Image: Shutterstock
The reliance on IT has increased dynamically for securities finance firms as a strategically important competitive advantage. If planned, developed, and managed properly, IT can achieve greater efficiency, smarter workflows and effective decision-making processes.
Not surprisingly, the search for new securities finance technology most commonly takes place when traders recognise a need, or when the current solution isn’t delivering the right results. Traders tend to consider themselves as early adopters when it comes to technology but often view their firms as lagging relative to their peers.
This often results in critical parts of the business being managed on Excel spreadsheets or macros developed by technology savvy traders. These solutions are often tactical and fragmented by asset class, region and even desk.
The increase in trading volumes through trade automation continues to exert stress on these standalone solutions, and can potentially lead to problems downstream as the calculations are rarely vetted. With so many different users sharing and adapting the spreadsheet to satisfy their needs, they are prone to error.
Traders need transparency across the global book and at any given time need to be able to determine availability, potential counterparties, volume and costs. As most firms have at no other time needed to build software that can respond systematically to multiple vehicles on a global basis, many traders can’t answer these fundamental questions.
There is demand from front-end users to acquire IT applications that will effectively and efficiently support one or more business processes. However, the decision making is no longer solely left in the hands of the head of business. It used to be that managing directors and executive vice presidents often had budget authority, but the reality now is that across many firms, larger purchases require approval from the C-suite.
Buying committees at financial services firms are growing and it’s estimated that more than 50 percent of technology decisions at banks involve 10 or more people. Whenever a big technology investment is being considered, stakeholders from various functional and regional divisions have to reach consensus on a strategy in order to move forward.
It is therefore important that process requirements are identified, business objectives are listed and the value versus risk of building or buying the IT application is weighed before the buying committee is engaged. The offerings should also be evaluated over the short and long term, with comparisons made between the cost and impact of a new build, and the cost of acquiring a proven vendor solution that can offer a quick return on investment.
Budget pressure and the inability to make unanimous decisions could direct security finance firms to build the functionality themselves. Of course, most organisations have highly experienced IT architects, but there are significant advantages to engaging with a vendor. For example, Trading Apps offers greater flexibility and cost and time savings, rather than building the software from scratch. Our apps sit on top of your existing core system, offering a full front-end suite and, when you buy from Trading Apps, you gain the ability to progress from one generation of technology to the next, to expand your technology solution without disrupting downstream solutions, and to decommission obsolete technology.
The factors that contribute to a successful IT acquisition are:
• Understanding of company objectives
• Strategic vision and planning
• Executive and management support
• Financial justification
• Use of external expertise in decision process
• Open communication with users
• Ongoing management of the system
• Future enhancement opportunities
The first issue the buying committee must deal with is an economic one: should the firm invest in a project involving new technology? Traditional capital budgeting approaches do not adequately answer this question. Consequently, they are seldom used. Instead, investments in new IT projects are based upon intuition, rather than hard evidence, as normally a major portion of the value of new IT projects accrues from future projects that use the technology. However, in the case of Trading Apps, we can demonstrate our apps provide a quickly discernible return on investment. One of our clients confirmed that within six weeks of using Trading Apps, its value on loan was up across all asset classes—24 percent for bonds and 23 percent for equities.
It is important to note that there are three aspects to this growth. Firstly, Trading Apps is more efficient as a locate/manage/booking system. Second, the connection to EquiLend’s Next Generation Trading solution has been critical. Finally, the efficiency from Trading Apps has afforded traders with more time to engage with borrowers and work on refinancing and bespoke transactions rather than spending time booking generic tickets.
Although Trading Apps is not the sole contributor, our software acts as the enabler to achieve increased market share and revenue growth.
The need for highly efficient execution of securities lending transactions grows with the automation of the market and there is intense competition between organisations to gain market share. Yet, despite huge investments in technology, many firms still struggle to make a decision on IT acquisition. Since it was founded in 2011, Trading Apps has signed up several large agent lenders and broker-dealers as clients, including some top-tier names. However, others have been stalled by the inability to reach a consensus, and, in an industry where everyone is chasing the same wallet, making no upgrades or changes means moving backwards.
Our clients obtain economic benefits from fundamental alterations to work processes. They receive true book transparency and full history across locates, borrow requests and trades. This allows them to look at individual markets or securities and recognise what is happening across specials and general collateral trading in terms of fills and fee levels. This data allows them to be proactive in how they leverage both the technology and trading processes globally.
The more automated trading that our clients conduct, the more they have to rely on their own team to manage pricing, availabilities or allocations and the technology that supports it. Trading Apps clients can do more analysis on the pre-trade, post-trade, and intra-trade stages, with real-time processes that look at trades as they happen.
Finally, it is recognised that peers are the first and most likely source of information about software solutions. It is a testament to our technology that Trading Apps was recognised as the best software solutions provider in 2016, as voted for by the market, in recognition of our innovative technology solutions. More importantly, one of our clients was also ranked top for trading connectivity and automation, demonstrating the impact our software has on workflows. In addition, Trading Apps’s reference clients are some of the largest organisations participating in the securities finance market today.
IT acquisition is expected to increase as more organisations seek a greater share of the market and higher revenue. IT acquisition strategy is often considered to be faster, easier, and the most powerful way for firms to meet their business needs. If the buying committee chooses the right vendor, this method can be successful and boost their company’s competitive advantage.
The right vendor should have proven technology, business and technical expertise, defined cost structure, customised solution and frequent software updates that are aligned to market changes and business evolution. Trading Apps has all of these attributes. We adopt a partnership approach with our clients and continue to develop our software and know how, to ensure constant innovation in our trading tools.
Not surprisingly, the search for new securities finance technology most commonly takes place when traders recognise a need, or when the current solution isn’t delivering the right results. Traders tend to consider themselves as early adopters when it comes to technology but often view their firms as lagging relative to their peers.
This often results in critical parts of the business being managed on Excel spreadsheets or macros developed by technology savvy traders. These solutions are often tactical and fragmented by asset class, region and even desk.
The increase in trading volumes through trade automation continues to exert stress on these standalone solutions, and can potentially lead to problems downstream as the calculations are rarely vetted. With so many different users sharing and adapting the spreadsheet to satisfy their needs, they are prone to error.
Traders need transparency across the global book and at any given time need to be able to determine availability, potential counterparties, volume and costs. As most firms have at no other time needed to build software that can respond systematically to multiple vehicles on a global basis, many traders can’t answer these fundamental questions.
There is demand from front-end users to acquire IT applications that will effectively and efficiently support one or more business processes. However, the decision making is no longer solely left in the hands of the head of business. It used to be that managing directors and executive vice presidents often had budget authority, but the reality now is that across many firms, larger purchases require approval from the C-suite.
Buying committees at financial services firms are growing and it’s estimated that more than 50 percent of technology decisions at banks involve 10 or more people. Whenever a big technology investment is being considered, stakeholders from various functional and regional divisions have to reach consensus on a strategy in order to move forward.
It is therefore important that process requirements are identified, business objectives are listed and the value versus risk of building or buying the IT application is weighed before the buying committee is engaged. The offerings should also be evaluated over the short and long term, with comparisons made between the cost and impact of a new build, and the cost of acquiring a proven vendor solution that can offer a quick return on investment.
Budget pressure and the inability to make unanimous decisions could direct security finance firms to build the functionality themselves. Of course, most organisations have highly experienced IT architects, but there are significant advantages to engaging with a vendor. For example, Trading Apps offers greater flexibility and cost and time savings, rather than building the software from scratch. Our apps sit on top of your existing core system, offering a full front-end suite and, when you buy from Trading Apps, you gain the ability to progress from one generation of technology to the next, to expand your technology solution without disrupting downstream solutions, and to decommission obsolete technology.
The factors that contribute to a successful IT acquisition are:
• Understanding of company objectives
• Strategic vision and planning
• Executive and management support
• Financial justification
• Use of external expertise in decision process
• Open communication with users
• Ongoing management of the system
• Future enhancement opportunities
The first issue the buying committee must deal with is an economic one: should the firm invest in a project involving new technology? Traditional capital budgeting approaches do not adequately answer this question. Consequently, they are seldom used. Instead, investments in new IT projects are based upon intuition, rather than hard evidence, as normally a major portion of the value of new IT projects accrues from future projects that use the technology. However, in the case of Trading Apps, we can demonstrate our apps provide a quickly discernible return on investment. One of our clients confirmed that within six weeks of using Trading Apps, its value on loan was up across all asset classes—24 percent for bonds and 23 percent for equities.
It is important to note that there are three aspects to this growth. Firstly, Trading Apps is more efficient as a locate/manage/booking system. Second, the connection to EquiLend’s Next Generation Trading solution has been critical. Finally, the efficiency from Trading Apps has afforded traders with more time to engage with borrowers and work on refinancing and bespoke transactions rather than spending time booking generic tickets.
Although Trading Apps is not the sole contributor, our software acts as the enabler to achieve increased market share and revenue growth.
The need for highly efficient execution of securities lending transactions grows with the automation of the market and there is intense competition between organisations to gain market share. Yet, despite huge investments in technology, many firms still struggle to make a decision on IT acquisition. Since it was founded in 2011, Trading Apps has signed up several large agent lenders and broker-dealers as clients, including some top-tier names. However, others have been stalled by the inability to reach a consensus, and, in an industry where everyone is chasing the same wallet, making no upgrades or changes means moving backwards.
Our clients obtain economic benefits from fundamental alterations to work processes. They receive true book transparency and full history across locates, borrow requests and trades. This allows them to look at individual markets or securities and recognise what is happening across specials and general collateral trading in terms of fills and fee levels. This data allows them to be proactive in how they leverage both the technology and trading processes globally.
The more automated trading that our clients conduct, the more they have to rely on their own team to manage pricing, availabilities or allocations and the technology that supports it. Trading Apps clients can do more analysis on the pre-trade, post-trade, and intra-trade stages, with real-time processes that look at trades as they happen.
Finally, it is recognised that peers are the first and most likely source of information about software solutions. It is a testament to our technology that Trading Apps was recognised as the best software solutions provider in 2016, as voted for by the market, in recognition of our innovative technology solutions. More importantly, one of our clients was also ranked top for trading connectivity and automation, demonstrating the impact our software has on workflows. In addition, Trading Apps’s reference clients are some of the largest organisations participating in the securities finance market today.
IT acquisition is expected to increase as more organisations seek a greater share of the market and higher revenue. IT acquisition strategy is often considered to be faster, easier, and the most powerful way for firms to meet their business needs. If the buying committee chooses the right vendor, this method can be successful and boost their company’s competitive advantage.
The right vendor should have proven technology, business and technical expertise, defined cost structure, customised solution and frequent software updates that are aligned to market changes and business evolution. Trading Apps has all of these attributes. We adopt a partnership approach with our clients and continue to develop our software and know how, to ensure constant innovation in our trading tools.
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