Modernising Post-Trade Systems: A Journey, Not a Destination
Written By: Ulf Axman, CCO at Exberry
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Post-trade processing is an integral part of the financial services industry as it verifies the details of very often instantaneous transactions. Similar to shifts in the rest of the financial services industry, clearing and settlement firms are being influenced by the emphasis of real-time risk management and data-driven decision-making.
Yet a growing number of post-trade firms are operating on outdated systems. Sticking with legacy systems has become a costly option due to technical limitations and scarcity of resources for maintenance. How can these firms situated within high-volume trading environments, safely transition to new technology?
Legacy Systems: Challenges and Opportunities
The issue of modernising a post-trade system is not easy, akin to “upgrading the software of a plane in mid-flight”: a risk that responsible boards of financial market infrastructures are understandably hesitant to undertake.
Vendors are tackling the challenge with a different approach. Instead of a “big bang”, full-system replacement, typically fraught with migration risks and cost implications, technology infrastructure providers have developed innovative modernisation methods based on module upgrades, without disrupting core systems. An incremental approach, taking place over a number of years, is much easier for boards and management committees to sign off on. This method of modernisation, especially within high-volume trading environments, should be considered more of a journey, rather than a replacement.
Modernisation as a journey
It is crucial that these modernisation efforts solve specific problems, rather than pursuing modernisation for its own sake. Indeed, each exchange, and even each department within an exchange, has different needs. When transitioning towards cloud-based and SaaS solutions, regulatory and operational constraints need to be addressed. Flexibility of delivery is key, with an emphasis on quick wins.
Innovations in Post-Trade Systems
Across the post-trade industry, modernisation efforts are reshaping business and operational models to meet international standards and attract a diversified customer base. Modernisation in this case, however, is a continuous journey, guided by strategic decision-making, customer engagement and technological innovation.
Embrace the modernisation journey for enhanced operational efficiency and global competitiveness. Exberry provides a fully-compliant, end-to-end exchange platform including risk and central counterparty clearing functionality. To learn more about Exberry’s successful modernisation implementations, please contact us at: hello@exberry.io
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Imagine a scenario in which a large, successful financial exchange is making profits across all its markets alike, from equities, fixed income and derivatives, to commodities and FX. Yet, sadly, this vision is far from reality. Oftentimes smaller and less liquid markets, such as for fixed income and derivatives, find it difficult to obtain the modernisation of infrastructure they need, even when it is just a simple feature request.
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