Then there is the question of how to balance a 'one size fits all' approach with the advantages of customisation. The answer lies in encouraging modifications where appropriate, but allowing them to be deployed and monitored centrally.
But perhaps the most pressing question is how to support the newly consolidated workflow. Intelligent workflow needs to extend seamlessly across all contract types and flow easily from front through to back office. Many technology vendors that claim to offer this capability struggle to deliver because their workflow has been assembled from smaller technology firms that they have acquired. Such systems can be hard to implement and a nightmare to support.
A more sensible approach to workflow technology enables FCMs to route orders seamlessly between desks and geographic locations. By using one consolidated workflow, compliance and risk can be turned from potential weakness into a powerful competitive differentiator. FCMs will need to be able to break down an order and smart route it over multiple markets whilst still maintaining its integrity. Because of the lack of fungibility involved, this link needs to be maintained at a system level and yet remain easily accessible to the end user.
Algos and TCA also require careful consideration. Most cash equity instruments are fairly static and therefore relatively easy to monitor and map over time. This is in contrast to a typical derivatives trade, which often needs to be rolled over a number of sequential contracts. Another challenge lies in the variety of asset classes supported by derivatives, and so an algo that works for one may not work for another.
For all these reasons, successful technology implementation is now a matter of partnership with the vendor. It’s not just about the roll-out; it’s the ongoing maintenance too. This requires an ongoing relationship with a supplier that has the global support, operating precision and experience to bring the necessary resources and structure together.
In other words, technology in and of itself is only part of the solution. It is the way it is used, the relationship with the supplier, and the end goal that makes the difference. A point solution - however good - can only solve a point problem. For FCMs facing a whole new way of managing workflow, costs and clients, that’s simply not enough. Instead, a workflow approach to connect the different parts of the firm together provides the only tenable solution and the necessary backbone to face the future with confidence.
The is based on a white paper published by Fidessa in December