Why investing in a new, integrated world of trading communications is a critical differentiator

June 27, 2022

4 min read

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The world of trading communications is experiencing rapid change. The sector has experienced a significant period of turmoil, consolidation and integration, as services and technology evolve to cater to new ways private lines are utilised by financial enterprises. 

This period of change is set to continue, and traders must be cognisant of how they’re likely to be impacted. There is a clear trend towards multichannel technology use, with legacy technologies such as Time-Division Multiplexing (TDM) – which has served the industry for many years – starts to become obsolete.

A new world of trading communications

The pandemic has catalysed a significant change in trading communication. It has forced organisations to adopt applications like Zoom or MSTeams, creating a high-pressure testing ground for soft clients that were rarely used before.

Tools like WebEx and Microsoft Teams have become ubiquitous since the start of 2020, although not as the primary channel. Voice is still a primary trading communications medium, as it’s critical for structuring complex investment products and executing high-value trades. However, Chat/IM functionality is used for the majority of communications between the trading floor, support functions, and counterparties.

Technology managers must focus on streamlining these various workflows for their trading staff, whilst ensuring legal and regulatory requirements are met.  

Cloud services are being embraced on the trading floor and across the wider enterprise. Technology managers now expect communications suppliers to offer genuine cloud offerings, where capacity can be flexed up and down easily in line with demand and on-prem footprints can start to be retired.

Integrating communications systems using CTI and APIs so that users can easily click between channels – such as taking a chat to voice when necessary – and auto-complete fields in CRM and OMS systems is also a critical part of the future vision.

This streamlining of workflows is happening now, but many organisations still have siloed structures that are not ready to support it.

There is competitive advantage to be achieved here. Integrated workspaces that enable efficient workflows will empower organisations to get ahead. That requires organisations to align their technology strategies alongside their strategic business objectives.

Organisations also reap considerable value from centralising compliance, which has been a recommended practice for years. Vendor tools increasingly feature an impressive range of integrations, encompassing voice, compliance capture, transcription, CRM, OMS, UC, ERM systems, cloud providers and social media.

Most communication systems can efficiently incorporate these tools and bring the processes together. New approaches also separate this front-end functionality from storage, analytics, surveillance, and trade reconstruction.

Managing the Transition

Achieving more streamlined workflows will present unique challenges for every financial organisation, although many will need to prioritise the remediation of end-of-life (EoL) and manage compliance risks.

Banks often have EoL risks with trading communications, voice capture, compliance storage and operating systems. They are also often dependent on TDM networks that are scheduled for end-of-service by their supplier and region over the next 4 years.

Even companies with a clear strategic vision realise that the changes required to achieve future technology environments can’t happen simultaneously. The right supplier can help to stabilise the situation and add value during the transition by helping systems to interoperate.

Telstra’s Trader Voice SIP Connect offers a number of valuable features for an industry in transition. With a simple set up, it creates a hybrid SIP and TDM environment that allows systems to interoperate. It records every line, regardless of endpoint.

It also features PSTN Private Wire integration, which is a market first and is very powerful for BCP scenarios or incorporating smaller brokers who may not have traditional Turret technologies.

Integration and innovation are critical

The future of trading floor innovation revolves around technology and seamless integration. IT managers are reaping significant cost savings, improving continuity, and increasing flexibility with their cloud investments and adoption isn’t likely to slow down.

Organisations must strive to improve trader workflows and provide a strong reference point for strategic development. Organisations must ensure they’re optimising system integration as the primary way to achieve this.

Technology vendors are enabling this through open APIs, acquisitions, and joint ventures. The well-established firms are using trading communities as barriers to entry, causing increased consolidation.

Innovation through integration is especially critical for new companies entering the market. Rather than trying to replace existing suppliers, a better approach is to develop integrations as widely as possible, providing added value to existing infrastructure as digital transformation strategies progress.  

IT managers have a critical role to play. They must challenge themselves to select the best solutions to support their organisation’s business journey now, whilst crafting a seamless plan for the future that doesn’t disrupt users and provides the foundation for future growth.

This is an excerpt from JP Reis’s blog: “How to integrate trading communications”. To read the full piece and learn more about integrating trading solutions, click here.