Commentary

Jared Dillian
Traders Magazine Online News

Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

Traders Poll

Would you feel better if the Chicago Stock Exchange were purchased by U.S. firm or consortium rather than a foreign one?

Yes

73%

No

4%

Doesn't matter to me

23%

Free Site Registration

July 31, 2001

Managing a Technology Alliance

By Jim Kern

Trading firms want the best, customizable technology to differentiate themselves in a fiercely competitive market. It helps them retain clients and generate more business.

The process of finding the best technology, the right partners and integrating these into an efficient solution can be a long and tortuous process.

A typical trading systems project, for example, can require multiple suppliers - each with their own distinct cultures and procedures.

In these cases, internal IT departments are faced with issues such as systems integration, project timescales and resourcing, to keep the project on track. It can be a daunting challenge.

To overcome these hurdles, trading firms are recognizing the advantages of working with one large player, or a 'one-stop-shop', which can offer support globally.

Playing Safe

At the same time, firms don't want to opt for the 'safe' option at the expense of missing out on technologies that will potentially deliver greater efficiencies and more advantages over the longer term.

It is therefore logical for suppliers to team up with other complementary solution providers to match trading firms' needs and deliver an integrated solution.

Alliances can often be instrumental in bringing new technologies to the trading floor. They can bring positive results and enhance productivity.

Financial institutions cannot afford to take risks in the deployment of mission-critical trading systems. Often it is only with the backing of a large, trusted organization that small, innovative players, can be tested by trading firms.

In this way, alliances bring mutual benefit to both suppliers and customers. With so many technology components essential for the smooth running of operations on the trading floor (and its peripheral areas), the ability to source and deploy an integrated solution from a single supplier can be an attractive proposition.

Voice Communications

Consider voice communications in the trading room. Firms must often work with more than five separate suppliers - for PBX integration, complex telephony switching, cabling, trading turrets, intercom and voice recording.

Furthermore, should firms subsequently wish to take advantage of technologies such as computer telephony integration (CTI), multi-channel integration or voice over Internet protocol (VoIP), they run the risk that these technologies may clash with systems already installed.

Those suppliers who can offer a total solution, and demonstrate the continual evolution and migration of their product suite to incorporate new developments, will deliver a competitive advantage.

Commerzbank is an example of an investment bank that successfully saw the benefits of alliances at its new trading floor in Frankfurt, Germany.

Syntegra is Commerzbank's prime contractor for a number of mission-critical systems, including Thales Contact Solutions' Renaissance digital voice recording architecture, Speakerbus' audio intercom systems and CTI Data Solutions' Proteus Trader call management application.

Outsourcing the full voice technology requirements of the floor to one supplier capable of managing the installation while coordinating the other suppliers, was a major factor in getting the project implemented on time and on budget, according to Dave Boyes, global voice architest at Commerzbank.

Indeed, outsourcing was a "huge help" in bringing the project in on time and on budget for Commerzbank, he added.

Clearly, alliances can offer many benefits. The responsibility for testing and integrating the different systems is taken away from the trading firm - enabling it to focus on core business - and passed along instead to the lead alliance partner.

More Intelligence

Firms should approach their technology suppliers to determine how they can work together more intelligently.

Is one supplier, for instance, prepared to take on the role of chief alliance partner? That means it is the prime contractor for the project?

Taking the approach of a 'total solution provider' - and integrating all technology components into a seamless solution - demonstrates forward thinking and the desire to focus on customer needs to deliver the best solution.

Jim Kern is general manager and vice president of trading systems in the Americas at Syntegra.