Front Office Technology and Front Office Trading: Financial Market Effect
THE FRONT OFFICE: WHAT TECHNOLOGY WILL SOON BE AVAILABLE?
Technology is having a profound effect on many of the world's industries, and the financial market certainly has not been left behind.
The emergence of better internet, computing software and communication tools is reshaping how many businesses in the industry operate, particularly front office departments.
Along with this new technology come a number of obstacles for companies to overcome, as with such widespread changes, staff of all ages must quickly be able to adapt to the evolution of technology.
Young staff may already be aware of the tools coming into the industry and their subsequent effects but, for those uninitiated, many questions will be asked, especially if they are comfortable with devices used in the past.
Another extremely significant consideration for firms is money, as they will need to be certain that their finances can handle the cost of adding new software and tools to their infrastructure.
Furthermore, before implementing new systems, firms must ensure they are aware of regulation in their field, as there are a number of rules that companies need to abide by in order to prevent themselves from being prosecuted.
One company that has made a concerted effort to expand its front-office capabilities is SEI, which recently acquired assets of the technology firm NorthStar Systems in a move that will boost the capabilities of its Global Wealth Platform.
This system will allow the firm to provide more sophisticated levels of front-office automation and functionality to its wealth management clients, with a particular focus on areas such as client acquisition and client management.
A multitude of client-related activities are automated by the technology. Among these are financial planning and proposal generation, investment policy statements and product catalogues.
Alfred P West Jr, SEI's chairman and chief executive officer, said: "Our clients are looking for a fully integrated operating platform on which to run their businesses.
"This acquisition will speed the delivery of these services to market and help us build out our vision of the Global Wealth Platform."
Mr West elaborated by saying that supplying clients with automated front-office capabilities was always part of the "road map" for the technology.
He added that the solutions will be introduced to the company's markets once the required integration work has been completed.
As mentioned earlier in this article, regulation is a key factor for front office companies that are looking to update their infrastructure with new technology.
This is especially imperative for the over-the-counter (OTC) market, where a number of legislative changes are set to be enacted, including the European Market Infrastructure Regulation (EMIR).
EMIR is set to be enforced at the end of this year and was devised as a means of tackling financial issues that have affected the global economy in the economic downturn. Similarly to EMIR, the Dodd-Frank Act will impact America's financial sector.
The legislation was passed in 2010 and aims to consolidate regulatory agencies, promote the transparency of derivatives and provide consumer protection reforms.
Both of these will have a number of effects for the OTC market, particularly when it comes to front office trading.
Industry analyst Stephen Bruel has also commented on the impact of regulation, informing Banking Technology: "There are some OTC derivatives providers such as Misys, Calypso and Murex that perform a lot of these front office trading functions from an OTC perspective and they're going to need to modify their technology, so that they look and act like something that trades futures because that's how the trading is going to evolve."
Overall, as highlighted by SEI's investment in front office technology, there is scope for companies to invest in new services in the market.
However, in such an uncertain economic climate, it is important that companies spend money wisely and take note of the necessary legislation in order to avoid prosecution.
Technology in the front office will be one of the topics under discussion at TradeTech Swaps & Derivatives, the largest global trading conference, 28-30 May 2012, London.
Watch TradeTech Swaps and Derivatives Video Interviews