By Varghese Thomas, global head of financial services at Savvis
“In this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin, 1789. An obvious addition to the list in the financial market is “change”. What changes are we talking about?
- Regulatory and Structural Change - In the U.S. we have the Dodd-Frank Wall Street Reform Act, plus the SEC’s ongoing review of potential curbs on high frequency trading, naked access and dark pools. In Europe it’s the MiFID review, UCITS and longer term Basel III, essentially resulting in a number of structural changes within the financial markets that firms must address. Liquidity fragmentation, municipal bonds and over-the-counter (OTC) instruments moving to exchanges, and multi-asset class trading are just a few examples that spring to mind. No doubt some uncertainty will lead to reviews and even further change down the track - which market participants, and the solutions providers who service them, must be in a position to respond to in a timely fashion.
- Environmental Change - What I’m referring to are firms’ own operating environments. We regularly hear our clients say that they’re under pressure to do more with less. Couple this with a need to be able to respond rapidly to their business units’ constantly changing requirements, it’s no wonder that IT departments in a number of firms struggle to deliver quickly, when they’re already stretched just “holding down the fort.” For instance, the rapid growth in existing and emerging markets in Asia has many financial institutions redeploying or increasing resources in order to participate. Firms will need the flexibility and reach of their IT partners to manage through the various challenges to operate in new environments.
- Technological Change - Moore’s law has shown that computing power continues to increase as associated cost and footprint decreases. Add to this the proliferation in high frequency/automated trading systems - in which proponents look to shave microseconds off the time it takes to receive and act upon a price - and it’s obvious that trading firms need to be able to leverage best-of-breed technology to remain competitive. Given the previous point, it can be difficult for many firms to allocate resources to constantly assess and implement new IT infrastructure.
In order to embrace constant change, organisations should look to a service provider which they can work closely with to tailor solutions to meet their needs, freeing resources to focus on their own core competencies and be able to respond to further changes as they arise.
Varghese Thomas is global head of financial services at Savvis