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Digitisation of Pre-Trade Client Workflows

Pre-trade

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Streamlining workflow for sales and trading desks

Although some areas within capital markets benefit from the efficiencies of electronic trading, the more complex and less liquid instruments still involve a great deal of manual, unstructured pre-trade activity. This creates friction (summarised in this SIFMA report), which is bad for client services, increases costs for both the buy side and the sell side, hampers liquidity and creates unnecessary operational risk, which arguably feeds into systemic risk at an industry level.

Can these issues be addressed by bringing more standardisation and automation to the market, particularly around pre-trade client workflows?

This was the topic of an online panel discussion hosted by The Realization Group and ipushpull on Tuesday 17th November, 2020. The webinar was led by Clive Posselt of The Realization Group, and featured Andy Mosson, Head of Strategic Partnerships, FICC eCommerce Sales, J.P. Morgan; Ayaz Haji, Head of Enterprise Reference Data, Goldman Sachs; Richard Turner, Senior Trader, Insight Investment; Craig Butterworth, Global Head of Sales & Account Management, Symphony; Andy Ross, CEO, CurveGlobal; Chris Scott, Senior Product Manager, TP-ICAP; and Matthew Cheung, CEO, ipushpull.

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Spreadsheets on the trading floor

There are many inefficiencies resulting from over-reliance on manual processes and the continued use of e-mail, spreadsheets and copy & paste in pre-trade, particularly for non-standardised instruments traded bi-laterally via voice or chat. These manual processes are not only slow and cumbersome, they are also inherently risky and do not add much value from a trading perspective.

Messaging standards such as FIX and FpML can work well for simple products traded on electronic markets. But for more complex instruments, the various parameters of the trade are often not easily expressed in a machine-readable and understandable way.

And the inefficiencies persist across the entire pre-trade lifecycle for both the buy-side and the sell-side, impacting price discovery, negotiation, execution and booking of trades.

Spreadsheets are the common standard denominator and remain ubiquitous on the trading desk, because a) they serve a useful purpose and b) they can be quickly deployed. Firms that are constrained in their development resources have to be very selective about where those resources are assigned, and it is generally much quicker and easier for someone with business subject matter expertise to solve a problem by creating an Excel spreadsheet than to wait for a solution to be developed in-house. The issue with such spreadsheets and workarounds however, is that they are not standardised and they do not scale.

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Towards a standardised approach

There is no shortage of potential solutions designed to help automate pre-trade workflow, both from established vendors and newer fintechs. However, the problem with many of these is that although they provide incrementally better tooling, they are still point solutions. The wider mission is to cohesively bring together some of these tools to leverage a common secure and compliant collaboration platform, to create standardisation at an industry level, where the buy side, sell side, exchanges, clearing houses, vendors and service providers all benefit from the network effect.

FIX is a good example of a well-governed, well-accepted protocol that has been widely used across the industry for some time. More recently, bodies like FINOS are creating standards for desktop workflow, enabling standardised tools that previously might have taken years to build, to be deployed in weeks or months. There are also situations where firms just get together and create what becomes a de-facto standard.

As these standards improve and become more widely adopted, they enable greater workflow automation. Fintechs, utilising tools like data mapping, allow firms to create a data-led approach and a more efficient client-focused process, thus providing the ability for firms to interoperate between all of these different types of standards and approaches, so that they can communicate seamlessly.

Financial institutions can leverage this technology to drive efficiency with the least amount of disruption to workflow, improving their speed to market and building and deploying bespoke solutions that no one else has, thus creating competitive advantage.

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Impact of COVID-19

The onset of COVID-19 and the resulting increase in remote flexible working has certainly accelerated digitalisation initiatives. Anecdotally, there has been more digital transformation in the past eight months than in the last eight years. Long held biases against working from home have been disproved by necessity and highlighted the need for firms to have a coherent omni-channel strategy.

In this current environment, end users need to be able to seamlessly switch between multiple different communication channels as it suits them, by having device and data interoperability. But with the financial services industry being so heavily regulated, the challenge is enabling that whilst still maintaining the strictest levels of compliance and security.

The goal therefore, is to be able to take communication that historically might have been siloed or non-compliant, and funnel it through a more comprehensive, standardised platform that addresses those shortcomings, and at the same time meshes them into a broader workflow digitalisation strategy.

The rapid transformation we have seen due to COVID, converging with a thriving capital markets fintech ecosystem, has led to an increased demand for solutions that can unbundle the legacy data – spreadsheets, emails, file share, voice, and chat – and rebundle it together with the tasks that were spread across different applications, into new structured workflows.

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Future State of pre-trade workflow

The future state of pre-trade technology is a world where instead of having highly paid professionals doing robotic tasks, we can instead combine the human and the machine conversations, the messages and the data, eliminate manual processes and improve efficiency by creating and adopting standardisation.

The ultimate goal for most technology providers is to free up traders and sales people to do the things that only humans can do, i.e. discuss the markets, give opinion, and create value, using new, live, collaborative, interoperating tools.

The industry now needs to address its legacy silos and re-engineer its manual pre-trade processes, with a mindset of delivering an improved experience, better internal efficiency and, at the same time, a significant reduction in operational risk.

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On-demand Webinar & Report: Digitisation of Pre-trade Client Workflows

Learn how J.P. Morgan, Goldman Sachs, Insight Investment and TP-ICAP are approaching the digitisation of pre-trade client workflows.

Understand how market infrastructure providers like CurveGlobal, Symphony and ipushpull are facilitating this by improving price discovery and building liquidity through standardisation, automation and live data.

GET YOUR COPY

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Digitalising Financial Markets with Data-as-a-Service

Data-as-a-Service

How ipushpull cloud-enables firms to seamlessly share live, streaming, and on-demand data with Data-as-a-Service.

There have been many unpredicted outcomes from the current COVID-19 pandemic, but one of the more interesting ones has been the rapid acceleration of digitalisation. How rapid? Well, earlier this year, Microsoft’s CEO Satya Nadella stated that they’d seen two years’ worth of digital transformation occur within the space of two months, something that was inconceivable at the start of the year. While IBM’s CEO Arvind Krishna said “history will look back on this as the moment when the digital transformation of business and society suddenly accelerated”.

Like many other industries, the financial markets sector, with so many staff confined to working from home in 2020, has suffered severe disruption to existing workflows, forcing firms to readjust their working practices.

But with every challenge comes opportunity, and the savvier firms are looking not only at how to get through the current situation, but how they can transform their business for the better over the longer term by utilising Cloud – and specifically Data-as-a-Service (DaaS) – as an enabling technology.

What is DaaS & what can it offer?

Data-as-a-Service provides the ability to seamlessly connect your data to the right person, at the right time, in the right application. This means that you can share your data – which could be sitting in a database, in a platform, or even in a spreadsheet – with your clients, your counterparties, or your colleagues, directly into applications they’re already using. Excel spreadsheets, chat platforms, chatbots, even internal platforms via an API, for example.

ipushpull’s approach to DaaS is to integrate into both legacy and cloud-based technologies, enabling firms to access and share live, streaming, and on-demand data across the entire trade lifecycle, from the front office through to the middle and back office.

To offer a few examples, live data might be an investment bank distributing live ‘high touch’ bond axes to the buyside’s spreadsheets, OMS or chat platform. Streaming data could be where a market-maker is constantly updating quotes from an internal pricing engine, or a broker client workflow of publishing real-time prices to clients in a ‘call around market’. And on-demand means that end users can pull the most up-to-date data from any data source. Ops users may be pulling down the latest list of ISINs to match to RIC codes for example, or risk managers might need to see live P&Ls in Symphony or Slack.

All of this needs to come with the requisite enterprise security, control, and audit necessary for financial markets.

Embracing the Cloud

Historically, data sharing in capital markets has been problematic. Either it’s been done manually, through emails, file sharing, and copying/pasting data – which is then very hard to streamline, automate, and audit – or firms have had to use expensive developers to connect data together, with none of it being ‘out of the box.’

ipushpull bundles all the data and tasks that were spread across spreadsheets, email and file shares into a new structured flow into any connected application. Utilising the Cloud as an enabling technology means you can share data inter as well as intra company. You can share data to trigger workflows with external clients, customers, and teams, and do it in any application via plug and play. And using the Cloud means it’s incredibly scalable, it’s significantly cheaper than trying to build it yourself, and it has a fast time to market.

The Cloud also offers several commercial benefits for both the suppliers of data and the end-users. From the end-user perspective, only paying for what you need allows you to match and scale your operational costs more closely with your trading activity, for example.

Beneficial use cases

Where our customers already have the data and the platform, but may lack the distribution into end-user applications, they have successfully used ipushpull either for the first or the last mile of connectivity.

The first mile is where data may be unstructured or sitting in an application or system that generally does not have any external connectivity. By connecting into ipushpull, data can be securely pushed into the Cloud and then made available elsewhere.

The last mile is about getting data into the applications or tools that your clients or your teams already use, so nothing new needs to be installed. That data can be coming directly into spreadsheets, into chat, or collaborative apps such as Symphony or Slack, or straight into your internal blotters or platforms that you might be using for that last mile of distribution.

Importantly, nothing is on-premise. Everything happens via the Cloud. Rather than engage costly development teams, or rely on manual processes where someone has to copy and paste from one application to another and send it to a counterparty who is doing something similar – a process that involves lots of manual tasks, emails, spreadsheets, copy/pasting and the like – by moving to this new way of data sharing, it unlocks both technical efficiency and automation, which means your staff can spend their time on higher-value activities or things that only humans can do such as being creative, complex decision making or speaking to clients.

A growing number of firms, including panelists from our recent webinar, such as NatWest Markets and Euromoney TRADEDATA, are now utilising different flavours of the examples given above. All of them are using ipushpull to accelerate digital initiatives to widen digital distribution channels and provide better experience for their clients and workflow efficiency and automation for end-users.

Conclusion

The digitalisation of these types of use cases will become more commonplace as people question why they are still using manual processes or one-off development projects to share data. As Data-as-a-Service becomes more prominent and firms look for technical efficiency and automation, we’ll see this new way of sharing data becoming the norm.

We see it already in the digitisation and electronification of OTC markets, where manual processes make way for standardised delivery of prices and workflow, but why stop there? Live data sharing can be ubiquitous internally across the firm, and externally to clients and counterparts – all of this being accelerated by the Cloud and by integrations into financial networks like Symphony, Refinitiv, Bloomberg, Broadridge, DTCC, Markit, etc.

In the post-COVID landscape, there is no new norm anymore. There is only a future state. As working practices change, workflow needs to be more efficient, and data needs to be easy to access, secure and access-controlled.

As we move towards live data-driven workflows, people need to be able to seamlessly connect to data in any application in real-time, at the right time, at the right place, and from any location.

We’re seeing Data-as-a-Service being adopted across sales and trading, between sell-side and buy-side, and across technology vendors. All of them are providing a better and more efficient experience for their clients.

It’s time to move away from manual processes, emails, spreadsheets, and copy/paste and away from embarking on expensive development projects to connect data from one app to another. Instead, look to incorporate Data-as-a-Service into your digital transformation projects or as a new digital distribution channel.

On-demand Webinar & Report: Digitisation of Pre-trade Client Workflows

Learn how J.P. Morgan, Goldman Sachs, Insight Investment and TP-ICAP are approaching the digitisation of pre-trade client workflows.

Understand how market infrastructure providers like CurveGlobal, Symphony and ipushpull are facilitating this by improving price discovery and building liquidity through standardisation, automation and live data.

REGISTER HERE

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How to Excel in your Post-Trade Digitalisation Workflow

workflow

A senior manager at a major bank noted at a recent conference that some staff spent well over 60% of their time in email, chat and spreadsheets.  As we complete the journey from paper to digital, with increased compliance and regulatory burden in our industry, is there an opportunity to innovate here?

A lot of post-trade workflow is spent managing exceptions and reconciliation breaks, which means viewing data from different systems in a normalised way. Spreadsheets lend themselves to this challenge and have become the norm, since they do not care what the source is. So long as the data is tabular and there is a common key across systems you can just copy the data across or re-enter it.

Alastair Rutherford, MD Ascendant Strategy says:

“Getting on top of all the data exchanges and workflows that occur to support post-trade activities is a key element of any Digital strategy in Capital Markets organisations. To industrialise post-trade, and make a step-function reduction in TCO, firms must understand these processes properly in the context of their target operating model, and implement automation that complements their core applications.”

post-trade workflow

 

There is a rich ecosystem of tools and applications to provide the glue such as external data lookup or calculation tools. Once you have added that glue it becomes transportable to your peers. Those with whom you share these spreadsheets can see exactly what you see and the method behind your conclusions.

Well, not quite… if you want to modify the recipe in your calculations, a new spreadsheet needs to be sent. When speaking to your peers (especially outside the organisation) how do you know you are looking at the same spreadsheet? What happens if the data that drives the calculation is changing or perhaps only available for you? What happens if you have incorrectly entered some of that data. Before long you have a huge pile of legacy, complicated spreadsheets, hopefully accurate for the moment they were created but with a context and scenario unclear in the document and certainly unclear to anyone auditing it. It shouldn’t come as a surprise that Accenture has estimated £125bn of complexity costs in pre-trade and post-trade workflows.

The solution here is to use a common set of tools in an environment which is centralised and maintained. Platforms such as Symphony can deliver the environment securely, meeting the needs of Information Security. However, the tools need to allow users common access to shared data with the appropriate interface to meet the needs within the post-trade workflow.

At ipushpull we are seeing a great deal of interest in our collaborative data platform to deliver exactly this – the ability to share data in real-time between groups of users, for workflow tools to rapidly enable decisions to be made which are then fully audited, but also the ability to rapidly adapt.

The success of the spreadsheet has been its ability to provide a quick solution to a business problem which is generally planned to be temporary. Over time, however, the overhead of navigating and maintaining the collection of spreadsheets has become too high. ipushpull addresses this challenge by providing an ecosystem for collaborative workflow across the post-trade community, delivering efficiency savings in terms of time spent converting data, but also cost savings in terms of accuracy – reducing the data errors means less resolutions. Less resolutions means more efficiency savings.

If you would like to speak to ipushpull please get in touch with sales@ipushpull.com.