Shaking Up The Back Office

A further consideration of the roundtable related to ongoing trends in outsourcing post-trade services. The conversation soon settled on the different types of outsourcing, namely on-shore and off-shore, and the relative problems that each has. To what extent outsourcing can be used by a firm to cut costs depends on many factors, including monitoring, control, upstream and downstream communication.

By bringing together the range of participants, the debate was able to move between the different elements necessary to cope with ever-increasing regulation, and the constant drive to reduce costs.

The key takeaways – regulation is changing and impacting many areas of the business, and a drive to continually reduce costs is leading to innovative solutions in post-trade, including FIX, outsourcing, and better analytics.

Chris Lee
Global Head Of Market Access and Electronic Brokerage
ABN Amro Clearing

It was felt by many at the roundtable that exchanges need to improve the quality of their support in helping the buy-side and the sell-side fulfil their ever changing regulatory obligations. Chris Lee of ABN AMRO Clearing commented “Sitting between exchange/vendor and client is becoming an increasingly hard task. Global regulators are becoming more demanding, but all too often exchanges provide very limited support. There is a lack of standardisation and of comprehensive, quality and timely data. Exchanges have different approaches to pre-trade risk layers and naked access is too often accepted by exchanges as the norm.”

It was felt by the roundtable that more alignment between exchanges and standardisation is urgently needed. Chris pointed out “Take for example exchange pre trade risk layers. If every exchange offers one, we end up with a screen from each exchange to control the limits. Pre trade risk layers at exchanges are a good thing, and it has taken years of lobbying by the industry in order to get exchanges to provide them (and still many refuse), but having a different exchange risk screens/log on per exchange creates another issue in administering them. We connect to 65 markets worldwide. That is potentially 65 different exchange risk layers to administer, all manually. A standard FIX Risk API from all worldwide exchanges would solve it.” The roundtable wholeheartedly agreed.

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