In the second of his two part series, Steve Woodyatt, chief executive and chairman of Object Trading, explores why brokers should view simplifying exchange connectivity as a way to improve overall business performance.
Sell-side firms including clearing and prime brokerages are
under increasing pressure to lower costs and improve pre-trade
risk management practices. Unfortunately, many rely on a web of
in-house systems and rigid vendor offerings for accessing
markets; a practice that makes both cost control and pre-trade
risk management difficult.
In order to free themselves from the limitations intrinsic
to this approach, many sell-sides are consolidating the number
of exchange connectivity gateways they use to access markets.
Through introducing a single, normalised access platform, more
and more firms are finding that they are able to meet vital
goals such as dramatically lowering operational expenses and
introducing a more effective approach to pre-trade risk
7. Lowering Costs of Exchange Connectivity
Typically, sell-sides rely on multiple disparate vendor
gateways for accessing the markets. They’re also
utilising numerous interfaces
that connect to a variety of front-end trading systems, as well
as middle and back office applications. Each connection point
must be updated when something changes, which can quickly drive
up the total cost of ownership (TCO). In fact, for many firms,
market connectivity TCO is north of €300k annually per
market. For brokers also working with an array of third-party
systems, vendors’ various hardware and software
requirements only put a further strain on an already tight IT
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