treasury & capital markets overview


IBS Journal Supplement September 2015


‘Overall, across the broad capital markets and treasury space, we are still seeing firms


looking at how they can take out costs.’ David Campbell, Broadridge


In many ways, Ion Trading is a mystery


wrapped up in an enigma. When it makes an acquisition, that company’s website becomes preserved in aspic, still live but unchanged from the day of the acquisition. The last news from Ffastfill was 2013. The front page of the Wall Street Systems web- site announces an award gained in 2011 and a white paper from 2010. The last news from IT2 and FSS? January 2013, announc- ing their takeovers. Ion Trading gives noth- ing away, no news, no interviews, no brief- ings, virtually no information on its website: it’s like a black hole into which vendors dis- appear and are never seen again. What of the utility fervour at present?


The likes of Calypso and Broadridge have been talking up this model for a few years now. The latter launched its post-trade processing utility in partnership with Accenture in mid-2013, with Broadridge’s Wilco-derived Gloss back office system at its heart. Société Générale Corporate & Investment Banking (SG CIB) went live as the first customer before the end of the year, with around 250 employees transfer- ring to Accenture as a result. There is now a fair amount of activity


around the utility model when it comes to sales and RFP processes, says David Camp- bell, Broadridge’s head of strategy for global technology and operations, with addition- al customers having been on-boarded. ‘Overall, across the broad capital markets and treasury space, we are still seeing firms


6


looking at how they can take out costs.’ This includes through rationalising across siloes and moving specific functions into a utili- ty-type model. The latter allows firms to gain scale and reduce costs in ‘non-differentiat- ing functions’. Some large organisations are looking at this model on an in-house basis, he adds, typically to provide services across different divisions where previously there were multiple duplicate systems. ‘They are either looking towards external providers or towards internal mutualisation.’ Many of the large trading banks ended up with a siloed mish-mash of packages and in-house developments. To a degree, things have come full circle. Pre-crisis, there were moves within some firms to significantly clean up the mess, typically by standardis- ing on fewer systems. The winning suppli- ers were mainly incumbents, with trading gradually migrated onto existing platforms. Progress was limited. The siloed structures of the banks proved difficult to breakdown. Moreover, for all of the supplier claims, no one system is truly cross-asset, as they all have their strengths and weaknesses, so the theory of ultimately moving everything onto one trading platform was somewhat thwarted by reality. There was still a tenden- cy to keep specialist trading systems, such as Misys’ Sophis-derived Risque, which was traditionally strong in equities and equi- ty derivatives. In addition, far from reduc- ing the number of systems, in those heady pre-crisis days, the push ever further into


© IBS Intelligence 2015 www.ibsintelligence.com


exotic instruments sometimes saw new sys- tems tacked onto the existing architecture to cope with this demand. There is now an element of ‘back to


basics’, although it is difficult to identify too many large banks cracking on with too much energy to return to the systems stand- ardisation projects on the past. This might be more manageable at a mid-tier level and, indeed, a bank such as Rabobank, which has moved more and more of its trading across the globe onto Calypso over the best part of a decade, is a case in point. There has been some retreat from


geographies (such as HSBC from Brazil) and some dropping of individual asset classes, with Sungard’s Kromann citing commodities as one of the likely areas, with smaller banks perhaps withdrawing and leaving things to the large commodity houses. However, this is a tough decision for many banks. ‘The biggest banks have an interesting challenge because they cannot really step down from being a complete trading counterpart for their customers,’ he feels. But for most, the cost base is too high, in comparison with what they earn, so there is often a rigorous analysis going on of what they do, he believes. They look at their P&L, make adjustments for risk, and then look at their balance sheets. Broadridge’s Campbell says rationali-


sation on a single platform, particularly for fixed income trading, to replace previous regional set-ups, is in vogue. And the util-


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16