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A Time for Anticipation | For Front Office, More of the Same Means More $$$$ | MiFID Brings New Trading, Data Management Opportunities | Easdaq Makes a Comeback as Equiduct | Clearing Firms Extend Their Outsourcing Businesses |
For Front Office, More of the Same Means More $$$$
January 1, 2007
"The sales cycle seems to have grown, particularly the purchase cycle for trader voice," Skoglund said. "There's complexity around voice over IP and what that means to the IT department. The customers are looking at their infrastructure, asking themselves how they will support IP, and is IP the right thing for them. That's one thing that is definitely on their mind and will continue to be on their mind in 2007."
Adjusting for Scale
Gerard Rafie, VP of San Francisco-based software house Calypso Technology, said that some hedge funds will continue to require systems that can support their sophisticated trading activity, delivered in a smaller package than the systems traditionally used by the banks. "We have worked with Sky Road to develop an offering that meets their requirements, and we expect to see continued uptake of this in 2007," he said, referring to his company's partnership with Sky Road, a Downers Grove, Ill. trading infrastructure company.
Additionally, Rafie continued, larger asset management companies find that the sizable derivatives positions on their books require more investment in support systems. "Traditional buy-side solutions have not been developed for derivatives trading, so these asset management companies are turning to solutions like Calypso to handle their requirements, particularly for derivatives processing," he said.
At the retail level, Adnane Charchour, CEO of Jersey City, N.J.-based Scivantage, a provider of Web-based front- and middle-office brokerage systems, said he anticipates about a 30 percent increase in industry spending from 2006. "The hot topic right now and in the immediate future is security and identity theft in the e-brokerage space, in addition to risk management," he said. "Another one is continued customer service improvement-how to improve communication between financial advisers and their customers."
David Chapman, CTO of New York-based consulting firm Finetix, said there will be continued interest in cross-product platforms and in mobile or "on the road" technological offerings. "In 2007, we're definitely seeing an increase in IT spending in that we see technology as a business-driving force, especially in terms of automated trading," he said.
Peter Sibirzeff, managing director of Stockholm-based trading technology company Orc Software's U.S. division, pointed out that U.S. market structures are undergoing rapid changes with, for example, the arrival of penny price quotes in options, which will require major system development and capacity upgrades. "We are working hard at providing good solutions," he said. "I don't think there's any market in the world that has as much strain as the U.S. equity options market."
Sibirzeff added that with multi-asset-class trading becoming the norm, exchanges are broadening their mandates-as the International Securities Exchange did with the ISE Stock Exchange, which introduced its full-fledged displayed market this month. "This also puts additional strain on the users that want to reach these liquidity pools and who now have to connect to more markets," the Orc executive noted.
As a result, customers now want to use a single broker-dealer platform that allows them to trade across the asset classes. "In the past, firms have been going for specific product-class products," said Sibirzeff, "but all of that is now converging. ... To trade one, you will need access to other product classes and liquidity pools." Smart routing, direct-market access and algorithmic trading-once seen as highly specialized e-trading advances and confined primarily to equities-are crossing product boundaries and reshaping entire markets, for investors and technology suppliers alike.