US Capital Markets Trading Technology Strategies: Industry Report

US Capital Markets Trading Technology Strategies

Product Type: Market Research Report
Published by: Datamonitor
Published: January 2006
Product Code: R313-14130

Description

Introduction
As financial markets remain sluggish, capital market institutions are increasingly focused on cost control in the middle and back office to provide an efficient organisational structure. Issues such as regulation, product differentiation and the development of new technologies has driven the need for organizational efficiency and balanced IT investment to remain competitive and add value.

Scope
Highlight trends and key areas of activities within capital markets sell-side trading sectors
Provides market opportunities & forecasts for applications expenditure and debt vs equity spend
Vendor positioning for the financial markets trading space
Highlights
IT strategy continues to be dominated by cost control as financial market institutions face ongoing margin pressure. While institutions are hesitant to pursue investment opportunities, technology-driven solutions are being seen as necessary to differentiate and gain competitive advantage amid tough conditions.

While MiFID (due April 2007) is an EU regulation, it has an effect on US institutions that have operations in any of the EU member states. By aiming for optimal transparency across all trading venues, the ruling gives firms a passport to trade by making it mandatory for a sell-side firm to state publicly prices for equities traded on its own book.

With the continued high level of algorithmic trading, brokers will need to find new and inventive ways of adding value (a changing of the value-chain model). There will also be added pressure to produce efficiency metrics for the buy side to differentiate between different algorithms from not only suppliers but also non-electronic methods.

Reasons to Purchase
Understand trends and key areas of activities within capital markets sell-side trading sectors
Gain insight into how the interplay of end-user trading, regulation & FSI dynamics are driving a renewed focus in growth initiatives & IT investments

Table of Contents

TABLE OF CONTENTS

CHAPTER 1 EXECUTIVE SUMMARY 3

Key Findings 3

CHAPTER 2 MARKET CONTEXT 10

Introduction 10

Key findings 10

Overview 11

Business drivers and trends 11

CHAPTER 3 BUSINESS / TECHNOLOGY IMPLICATIONS 19

Introduction 19

Key findings 19

CHAPTER 4 COMPETITIVE DYNAMICS 35

Introduction 35

Key findings 35

Competitor identification 36

CHAPTER 5 THE FUTURE DECODED 45

Introduction 45

Key findings 45

Application spend by front, middle and back office 46

Application spend by product 48

CHAPTER 6 APPENDIX 51

Definitions 51

Future readings 51

SPP writing team 52

LIST OF TABLES

Table 1: Application location spend 46

Table 2: Application spend by product 49

LIST OF FIGURES

Figure 1: Executive summary - market context 3

Figure 2: Executive summary - Competitive dynamics 4

Figure 3: Executive Summary - The future decoded 5

Figure 4: Regulatory landscape 13

Figure 5: Key drivers of IT strategy 14

Figure 6: Composition of Goldman Sachs revenue 15

Figure 7: Growth in derivatives 17

Figure 8: Trade flow lifecycle 20

Figure 9: Growth in algorithmic trading 22

Figure 10: The evolution of STP 27

Figure 11: Key areas for change-the-bank spend 29

Figure 12: Leveraging synergies across asset-specific applications 30

Figure 13: Componentization in the middle and back office 32

Figure 14: Basis for outsourcing decisions 33

Figure 15: Vendor offering matrix 37

Figure 16: Core system strategies for FSIs planning to upgrade 39

Figure 17: Product design flow 43

Figure 18: Application spend by front, middle and back office 46

Figure 19 Debt vs equity IT spend 48

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