Fusing Market Infrastructure Technology: Exploring The ‘Buy, Build And Integrate’ Approach

Change is afoot when it comes to market infrastructure technology. The old arguments over “buy vs build” have been relegated. Instead, firms are touting a “buy, build and integrate” approach, combining pre-built platforms with proprietary technology systems.

Even incumbents with their full, self-built systems are starting to integrate specialised vendor platforms, swayed by their cost-effectiveness and functionality. According to Jesse Forster of Coalition Greenwich, the quest for capabilities around data analytics and quality of execution measurements is driving this new trend. 

Since the rise of fintech in the early 2000s, organisations have been faced with a choice: either buy a piece of vendor technology off the shelf, or build and manage the technology themselves. Now firms and infrastructure providers are buying vendor tech and adding their own technology solutions on top. Singapore-based commodities exchange Abaxx is one such example of this within the regulated exchange industry.

Abaxx Exchange has integrated an off-the-shelf matching engine and central order book solution to power the Abaxx platform. Within six months, the exchange was able to deploy a robust, transparent and regulation-ready trading platform, offering brokers and Futures Commission Merchants (FCMs) seamless market access in the highly competitive global commodity futures markets. 

Requirements for buying, building & integrating

According to the Coalition Greenwich “Top Market Structure Trends to Watch in 2024” report:

“[The ‘buy, build and integrate’] approach provides a middle ground, leveraging a pre-built foundation that can be expanded and tailored through additional development or integration with internal systems. It grants firms greater control, flexibility and adaptability while reducing development time and costs. However, customisation and development efforts require resources, expertise and collaboration with vendors.”

Organisations looking to create this type of bespoke “buy, build and integrate” concept will need to focus on what makes a hybrid solution workable in the first place. As such, vendor systems must have the ability to easily integrate with existing proprietary technology and be backed-up by a demonstrated track record of reliability. Third-party suppliers will also need to ensure that they have upped their game in terms of customer support and training, all with the aim of easing collaboration. 

The potential of hybrid

Embracing a “buy, build and integrate” ethos marks a dynamic shift in the approach to market infrastructure technology. It will be interesting indeed to observe the innovative potential that can emerge from these transformative types of hybrid solutions.