By Ben Challice, President & Chief of Strategy
Following the recent ISLA Madrid session Post-Trade Alpha – A Commercial Differentiator?, panellist Ben Challice, President & Chief of Strategy, revisits some of the key points (from a Pirum clients' point of view).
The era of a securities finance business' front office seeking alpha, while the middle and back offices execute a myriad of functions to facilitate the trade, is well and truly over. That is, if that ever truly was the case.
The reason being and forgive the statement of the obvious: if you don’t measure it, you can’t improve it effectively. Therefore, when it comes to growing a business, data is key. And the ability to analyze it across the entire system, well that is king.
That’s why, to remain competitive in today’s securities finance game, the smartest firms are grasping a fundamental competitive advantage: intelligently gathering, then strategically analyzing a business' trade lifecycle in granular and end-to-end detail.
Doing so yields a real-time, razor-sharp and enterprise-wide edge, accelerating the speed and improving the precision of their decision-making, leaving those that rely on disparate systems in their wake.
Today, it’s in each firm’s long-term interest to leverage complete lifecycle vendors that offer a single tech stack covering the entire Equities/Fixed Income lifecycles.
The first case in point: failing to do so means missing out on the potential alpha arising from 'Get it right, pre trade' operations.
By ensuring trades are conducted with all the trade variables understood, then much of the risk of downstream issues leading to accruing costly fails and penalties, can be reduced.
The second case in point: by analyzing data from across the lifecycle, including behavioural data such as which counterparties fail most often, and which have previously demonstrated stable inventory, firms can unlock a 'true cost of trade' view. Such a truthful (i.e. accurate, real-time, holistic) view is surely the bedrock of a successful trading strategy.
In addition to such upside, firms with integrated systems and service providers will be paying less than their competitors that have an operating model. The significant sums of money, time and resources spent in contracting, managing, integrating, training, and maintaining multiple applications/vendors to service different components of the same trade lifecycle is costly and restricts scalable growth
Compare that to a forward-thinking firm that leverages a unified dataset offered by a complete lifecycle tech stack. Integrations become smooth and quick as the pipes are already there. Enterprise contracts make renewals simpler and more cost effective, let alone economies of scale bringing down overall costs.
Ultimately, time waits for no one – at least if they want to remain successful in the game. The way our industry is evolving is no different from other financial services. A single, standardized, portable dataset will become the expectation.
And that's why Pirum's complete lifecycle offering exists. For the last 25 years, we have strongly believed that the required foundation for our industry is a shared, uniform workflow. More recently, it’s become apparent that, to truly leverage new technologies such as DLT, AI and LLM – such a shared view of data will be a necessity.
To give every market participant the ability to connect to anyone and trade in any format, in real-time, globally – that's true democratization for an industry that wants choice but is limited by scarce resources.
Those firms that do invest in this foundation will gain the competitive advantage, while those that remain on fragmented systems will increasingly fall behind. It's make or break time, especially with AI and LLM beginning to drive the conversation.
Want to talk with Ben and our team about how Pirum solutions can make your firm more profitable? Get in touch.