Stock settlement is easy. With modernized systems, when everything works and both parties submit the right info at the right time, it can be frictionless and can happen in near real-time.
Most BD’s however, have multiple ways (or flows) to process trades through to settlement.
Whereas in FI much business complexity comes from the product and pricing, in EQ it comes from the number of flows.
The # of “flows” can be roughly calculated as the product of 1) the # of internal business types 2) the # of client order types and 3) the # of execution strategies. It can be a big number.
And this is where the problems start. Not every flow uses the same systems, not all systems have been modernized, and with a history of acquisition, the same flow can be implemented multiple ways.
The booking model of a mature cash equities business, is like a “graveyard” of failed business ideas because revenue or not, the complexity from these booking “edge cases” will still hang around as tech debt.
A legacy system will need many people (usually in Ops) to make trades “flow” on a day-to-day basis, where “make things flow” means acting as the human glue between many disconnected systems.
This is not an easy job. You need expert knowledge of how the business works, how the systems work and a keen ability for multi-tasking across many high-profile complex events. But things do work, it’s just expensive.
Flow modernization has been an activity for 20 years, but it happens in order of priority. Firms find it hard to know which flows are the costliest and so modernize by volume – as the downside risk is much greater with high volume flows. It can literally break the firm.
What gets left are many smaller flows, incapable of causing “global extinction events” but together take up a lot of manual horsepower to keep them flowing and, importantly in the context of t+1, they extend the amount of time it takes to settle trades.
Short of hiring more people or completing already decades old modernization projects in impossible time frames, firms need an answer, fast, on what to do to meet the deadline.
The unique combination of Velox (the development platform) and Finsemble (the desktop-interop provider) is helping Capital Markets software engineers to build faster the systems that help users operate over complex data and system ecosystems. This means implementing browser-based exception-based workflows that are integrated with the many backend systems that could be involved in processing a trade.
By making “multiple systems act as one”, the time required to build automatic workflows that can straight-through-process trades or consolidate into one UI all the data and actions needed to solve an exception can be massively reduced.
Reach out to firstname.lastname@example.org to find out more about how we can help you meet your t+1 deadlines.