The Financial sector has recently seen mounting debate over the appropriateness of post-trade technology in today’s environment of expansive and substantial regulation. As a tool it is clearly essential to the effective and efficient operation of investment or brokering firms today, however the question remains whether it was designed for a simpler trading environment and therefore less effective in today’s constrained market.
The following article looks at why a change to such solutions might be essential in today’s complex financial environment.
The Problems for Post-Trade Technology
As firms’ systems grow and adapt within the evolving financial world, the potential for serious problems increases steadily. Missed business, ineffective risk management and failed trades could all be brought about by this new trading environment and the use of post-trade technology that is not built to cope with such complex regulation.
Although regulation has always been an integral part of the financial world, the sheer volume of legislation and rules that has been seen since the financial crisis in the late 2000s has changed the landscape significantly. With further regulation likely over the coming years, firms need post-trade technology that is adaptable and flexible to such changes.
There is also the added issue of increasing volumes of trade on the financial markets. A white paper from London Stock Exchange Group (available on the UnaVista website) noted that over the last five years a four-fold increase in the traditional asset class of equities has been seen in their Order Book. This rise, coupled with a lack of common standards among trading firms’ systems, has meant the processing efficiency has been damaged.
The Need for Flexible Technology
As regulation grows alongside an expanding trading market, the costs and issues associated with integrating archaic systems across a number of firms in different countries will become such that efficiency is reduced.
Investment and brokering firms need more flexible post-trade solutions to prevent such issues down the line, and moves to standardise systems are essential to simplify integration between parties. Post-trade technology needs to be adaptable and flexible to keep up with the evolving trade environment and cope with shifting user demands – something that will help future-proof such tools and ensure their long term value.
April Orchid is well known finance and business content provider within the business and finance industry. As a close follower of UnaVista, she prides herself on writing clear incisive articles with her strong understanding of today’s financial commerce.