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Why should a trading firm try to be an IT firm?

It used to be the case that the more complex your trading infrastructure, the larger your IT team needed to be. Systems specialists, networking gurus, database administrators, telephony and IT support were all needed to manage these systems front-to-back, globally.

Arguably, things have become even more complex in recent years – multi-asset, multi-jurisdictional strategies need to be combined with more onerous regulatory oversight and more demanding client expectations. IT budgets (and staff) can no longer cope. Combine this with increased pressure on spending and bottom line and it’s clear that the equation doesn’t balance.

So what’s to be done? How can trading firms reduce IT spend whilst having the capability to meet current and future demands? Trading infrastructure and connectivity is one area which lends itself being managed outside the firm. For a global institution with multiple platforms located around the world, managing proprietary connections is not the best use of resources. In addition, trading centres rise and fall, today’s Brazil could be tomorrow’s Cyprus and nobody wants to pay for redundant infrastructure.

Some advocate a wholly outsourced or managed solution but this sits a little uncomfortably with firms where security, reliability and accuracy are competitive differentiators. After all, if you’re using the same system as your competitors, where’s the technology advantage?

A more sensible solution is to take an approach that allows you to play to your strengths whilst using external partners to take care of non-core functions. Data centres and connectivity can be outsourced to cloud or managed services providers, saving institutions the headaches of managing multiple carriers across different time zones and SLAs. Economies of scale can be achieved by making use of existing connections whilst connections that are no longer needed do not have to be a burden. Relying on a dedicated partner also means that no network improvement work needs to be done or upgrades performed.

This refocusing of the IT department’s efforts removes the issues involved with running a global infrastructure and allows businesses to concentrate on what makes them competitive. All too important in today’s cost- and regulatory-conscious world.



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