Author: Tony Scianna, executive vice president, SunGard’s brokerage & clearance business
Last week, I spoke on a panel about operational efficiency at FIA Clearing 2010 – A Derivatives Forum in New York. I was joined by panel chair Brian Peldunas; Philippe Buhannic, chairman & CEO, TradingScreen; Edward Licciardo, vice president, Deutsche Bank Securities; and Lenny Musso, director, Futures Operations, Citigroup Global Markets, who all helped make the session dynamic and smart. I was glad to participate in this timely discussion.
The starting point for the conversation was this: The front office predicts that volume will double in the next two years. What would need to be fixed/standardized/automated to make handling additional volume effortless? What processes need to be improved or changed?
The five of us agreed on several ideas, including:
- Creating a standard protocol for communication between the buy-side and the sell-side
- Prioritizing position aggregation and real-time processing with respect to increasing volume capacity
- Managing brokerage and exchange fees more accurately and efficiently
- Developing and adopting an industry utility to automate processing and provide information on transactions in real time
As I said on the panel, workflow and rules are key to better managing exceptions. The industry is in flux, and we need to accommodate the new regulatory climate. Transparency is important here. Real-time and on-demand data is important. Developing sound standards is important.
During the session, one of my fellow panelists, Lenny Musso, said something that really rings true when we are looking at how to tackle the challenges of operational efficiency: “The more we do at the root, the better the tree grows.”
So, what are you doing to make sure the tree grows strong? Are you re-examining your workflow and business rules? Would you support standardized communications? Could an industry utility contribute value?
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Key ideas from last week's operational efficiency panel at FIA Clearing 2010 http://ow.ly/1BIaY #ten10
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Key takeaways from @tonyscianna's operational efficiency panel at last week's FIA Clearing event http://ow.ly/1BN98 #ten10
From a great event RT @tonyscianna: Key ideas from last week's operational efficiency panel at FIA Clearing 2010 http://ow.ly/1BIaY #ten10
RT @tonyscianna: Key ideas from last week's operational efficiency panel at FIA Clearing 2010 http://ow.ly/1BIaY #ten10
I thought the industry had a standard communications protocol and that is FIX? What am I missing here. We also have the FIA Posttrade Working Group working with major clearing houses on a standard that is starting to be adopted globally?
Jim: While it is true that FIX and other tag-based messaging standards are gaining a lot of traction, we have found neither their adoption nor implementation to be uniform across the industry. They are an improvement, but they are hardly the silver bullet that everyone had originally hoped for. Take post-trade allocations for example. These allocations can be received from customers in literally dozens of different formats – FIXML, FIX, Excel spreadsheets – some are even finding a way to put this information into a Swift message. As a result, managing these different types of protocols can be problematic, expensive, and inefficient. Like most great journeys, this one will be solved one step at a time…