What keeps the buyside up at night? Traders spoke with Megan Costello, president of Fidessa Buyside North America, for her insight.
As part of your role as President Buyside North America for Fidessa, what’s on the mind of the buyside these days? What keeps them up at night?
Megan Costello: I think regulation and transparency continue to be a big focus. The effort associated with addressing regulatory changes is quite consuming.
What are they concerned about?
Costello: Some are waiting for final regulations and some clarity is coming from the regulators. From a risk perspective, they are making sure that their house and their risk practices are in order because there is such a focus on regulatory controls. After the Crash of 2008, we had a good two years of people wondering when the changes would take effect and how would they need to respond.
Are the buyside firms at the point where they are buying new solutions or are they changing their risk mitigation practices?
Costello: Both. In the Tier 2 space of buyside firms, we are seeing a drive towards more automation and addressing the need with new solutions. At larger firms, we see a trend to provide more consistent views of their operation, like leveraging our Sentinel product for compliance monitoring across business units.
For the Tier 2 firms, are the buying these solutions, building them or are they expecting them to be provided by the sellside?
Costello: The Tier 2 firms look to vendors to provide cost effective solutions that may or may not include outsourcing the operational responsibility.
Does the buyside have trust issues when it comes to their risk practices and their data?
Costello: It’s evolving. While there is still some hesitation about where data is housed, in general people are becoming much more comfortable with leveraging the cloud.
What are they worried about – Security and client data? How do you allay their fears?
Costello: They are definitely concerned about the security and their client data. Fidessa has been in the business of hosting, managing and running client platforms for over 15 years and operate our own global network and data centers to the very highest industry standards.
Where are your data centers located?
Costello: We have data centers covering all the major financial centers around the world and our own global network that connects them to our buy-side clients, sell-side clients, trading venues, etc.
How does Fidessa define a Tier 2 buyside firm?
Costello: It is a combination of size, complexity of asset coverage and client assets under management.
Have more buyside firms asked you to take over operations than they wouldn’t five years ago?
Costello: Yes. Traditionally we’ve delivered our platform using an enterprise model. While this is not always the most popular approach today, there are some clients who want this approach. Over the last few years we have seen increasing demand for managed and hosted solutions, which is what we can now offer. Five years ago would people be open to do this? Not so many. After the crash, the size of IT teams shrank and firms were getting away from large projects. In the last three years the trend to value-added hosted and managed services really started.