FX MYTHBUSTERS
be the first. But if you want to get to market with one asset class quickly, and then add additional asset classes that re-use the same underlying infrastructure, an SDP framework is the only sensible way to go.
Although we appreciate that User Experience (UX) really matters with SDPs we have so many different types of client groups it’s surely going to be impossible designing a platform that will appeal to all of them?
Te platform is separate from, although clearly closely connected to, the client-facing application. A well designed platform can support different client-facing applications that serve as many client groups as you need. Te client-facing application, whether locally installed or running in a Web browser, should be designed to meet the requirements of its specific client group. Tis can readily be done on top of a single, performant, unified platform.
In fact using a well-architected UX framework allows many of the UI components to be reused across different UX deliveries. HTML5 allows significant re-use onto mobile platforms, something an SDP built as an installed desktop application or using Flex/ Silverlight is not able to provide.
SDPs are ultimately built for clients so why would we need to worry too much about enriching the platform for our own internal sales traders?
If your SDP has been well designed with a suitable architecture then giving each of your user groups exactly what they need, whether they’re external clients or internal sales traders, is readily achievable.
What convincing arguments would support the view that SDPs will become more important as new regulatory changes unfold and are best positioned to provide routing through to SEFs?
A detailed answer to this question alone could fill a whole article, but in summary, banks will want to maintain their client relationship and offer supporting services such as margin and collateral management and clearing. So rather than not offer a price, banks will offer a mixture of both risk and agency prices,
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possibly even for the same instrument, and route the trade appropriately.
We are a buy-side firm concerned about Best Execution. Doesn’t this make the case for using a MDP more compelling?
Best Execution is about more than price: Certainty of execution, availability of pre-trade information and efficiency of operation have all been cited as important factors in the choice of trading venue. And in FX the price across the market for the major currency pairs is so widely known that multiple price quotes may not be necessary at all.
The internet is the natural communication medium for SDPs so presumably these platforms will always be constrained by the underlying latency and predictability of this public network?
Any network has an ultimate physical limit on the speed with which a message can be transmitted. SDPs are primarily designed for human rather than machine interaction; a human takes 300-400 milliseconds to blink and 200-300ms to react. Tat is greater than the average round-trip latency for a message on one of our clients’ internet- connected SDPs, even across the Atlantic.
Furthermore the internet is self- healing and resilient, which may not be true of private networks. Te increasing performance, reliability and
resilience of the public internet over the past few years have enabled the increasing
deployment and adoption of SDPs.
Technology is always evolving. How can we make sure that our investment in an SDP platform would ensure that we can continue to deliver a compelling offering whilst also defending our franchise against competitors?
Choose a good, well-designed SDP framework that provides a layered architecture. Being able to rapidly add new products and services, and quickly take advantage of technology trends, is key to remaining future-proof. Using an SDP framework that supports these emerging requirements and also provides many of the services and building blocks needed ensures that the investments made are in the value-added UX, services and underlying trading capabilities rather than infrastructure.
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