Sell-side firms are seeking to rationalize their cost base in an era of dwindling commissions and tighter spreads, and one of the easiest ways to do this is through outsourcing.
“In the past, there was a real sense that FCMs wanted a lot of control over their user's experience, and now they're starting to realize that they would rather be able to reduce their costs, even if it means giving up some control,” Drew Shields, director of product management at Trading Technologies, told Markets Media.
This is evident by the demand for software-as-a-service (SaaS) and other managed services. TT is rolling out a new SaaS version of its trading platform that’s accessible via desktop, browser, and mobile applications, with no back-end infrastructure fees or maintenance.
“Two years ago, we would have had a lot of people saying, ‘I don't want the vendor between me and my customers,’” said Shields. “Now, as they continue to try to cut, cut, cut, they're realizing it's worth more to have lower expenses by leveraging partners in the tech space than it is to have total and absolute control over the customer experience. That seems to be a trend.”
The platform, which was launched in limited release last year and is scheduled for general release this quarter, represents a “complete re-write, everything from exchange connectivity up to the front end. We're really excited about that. It is a 100% software as a service solution. It's accessible from anywhere, desktop, laptop, mobile, tablet, etc., so it's a super flexible and accessible front end.”
In addition to its core futures trading capabilities, the new platform will eventually include support for options trading, as well as third-party algorithms. “We're changing some things philosophically in the way we try to offer services,” said Shields. “Instead of a one-size-fits-all approach, we have an a la carte model to partner with brokers and banks to provide back-end services, as well as what we think is the gold standard for futures trading on the front end.”
Another trend to watch for in 2015 is the “continuing attack on Bloomberg's stranglehold on the desktop,” said Shields. “Companies like Symphony Communications are attacking the communication side of the Bloomberg offering, and companies like Money.net are attacking the data side.”
Featured image via Makkuro_GL/Dollar Photo Club
