OpenFin, which provides the operating layer for desktops in the financial industry, is leading an initiative for universal connectivity as the lack of agreed-upon standards has been identified as the biggest barrier for the adoption of utilities by the Association for Financial Markets in Europe.
An AFME report last month, Industry Utilities: A perspective for Capital Markets, said harmonised standards are critical for increasing the consistency, interoperability and participation levels of utilities.
“In our members survey, the lack of industry standards was identified as the most critical challenge and barrier for the adoption of utilities,” added the report.
Last week the Financial Desktop Connectivity and Collaboration Consortium, FDC3, said it is committed to addressing the fragmented software landscape of capital markets. The consortium consists of large finance industry players and OpenFin, which provides the operating layer for desktops in the financial industry, similar to the Android or iOS operating platform for mobile phones. OpenFin has contributed the open-source code for this initiative and is also providing a central app directory which will be freely accessible.
Adam Toms, chief executive of Europe for OpenFin, told Markets Media: “OpenFin is the standardised operating layer for financial desktops but the next stop is bringing interoperability for apps to life. The context and intent of apps needs to be understood by using common standards and protocols, similar to the FIX protocol.”
Bhupesh Vora, managing director, markets technology at Barclays said in a statement: “Communicating and sharing context between multiple apps without the huge overhead of bespoke integration will be a massive boost to productivity for both the development community and ultimately our salespeople and traders to get more done. FDC3 will give us on the desktop what FIX gave us for server side interoperability between venues and clients”.
The AFME study said that for utilities to be successful they need to interoperable, standardised, global and open to all.
"This is an important initiative and we welcome broad participation and it is open to all firms, not just OpenFin customers,” added Toms. “It impacts not just traders and portfolio managers but also compliance, risk, middle office and back office users.”
Toms, former chief executive of broker Instinet Europe, joined OpenFin last year as the firm expands in Europe. Prior to Instinet, Toms was co-global head of electronic trading at Nomura, having joined as part of the Japanese bank’s acquisition of Lehman Brothers.
“London and Europe are fintech centres of excellence and opportunities continue to expand,” added Toms. “Many global heads of digital for work stations have been appointed in London in the past 12 to 18 months.
Members of the FDC3 include Algomi, AllianceBernstein, Barclays, BNP Paribas, ChartIQ, Citadel, Cloud9, FactSet, Fidessa, GreenKey, J.P. Morgan, Morgan Stanley, OpenFin, OTAS Technologies, RBC, TP ICAP and Wellington Management Company.
Jim Adams, managing director, CIB technology at JP Morgan, said in a statement: “Our corporate and investment banking staff can use anywhere between 5-15 applications in their daily workflow. Interoperability would allow this workflow to become seamless across applications and platforms, ultimately making our employees more productive and informed when talking to internal and external clients.”
The AFME report said utilities for capital markets are a way for participants to pool resources and capabilities and to collaborate in order to achieve benefits of efficiency, scale and cost saving.
The survey found that many AFME members identified ‘third-party and financial institution joint venture’ as a preferred approach for providing a utility. “The benefits a third party can bring include capabilities or expertise in relation to underlying technology platforms and innovation, implementation and change capability, independence and impartiality, and commercial options such as managed services,” added AFME.
The report identified eight principles that aim to increase the adoption and benefit of utilities - governance, transparency, compliance, standards, interoperability, scale, economic sustainability and market efficiency.
However AFME also highlighted four barriers which can prevent utilities from being successful including internal investment factors, where funding limitations may prevent firms from investing with a long-term horizon; external regulatory factors; transformation, where complex operational structures or the burden of legacy technology may restrict moving to a utility; and finally operation, where firms may be reluctant to ‘give up’ control to a third-party.
James Kemp, managing director at AFME, said in a statement: “At a time of rapid technological change, and as the industry continues to focus on reducing costs and increasing efficiency, the opportunity to create utilities is attracting renewed attention from capital markets participants.”