Trading desks technology: How did we get here?

Bloomberg for Enterprise 

Anyone who’s seen a Wall Street trading floor knows that a trader’s desktop is made up of multiple screens containing market data, spreadsheets, charting and trading applications. Working across several monitors and between disparate applications can be a dizzying experience for the novice and Wall Street veteran alike. But because trading firms must stay ahead of global markets across a variety of asset classes, there is a lot of pressure on the traders to do more, and do it efficiently.

So how did we get here?

Due to ever-growing market complexities banks have responded by putting more on a capital markets desktop. Over time, a trader or salesperson is presented with an increased inventory of applications in order to do their jobs. These applications are either vendor supplied or built by in-house development teams. The downstream effect has been an increase in the amount of context switching between these tools. This increase has slowed a trader’s ability to move quickly on opportunities and the result is fewer transactions per hour.

But, the complex ecosystem of applications run by the front office can be an even bigger problem for technology professionals who support these desks. Their job over the years has gotten more complex for three main reasons.

• First, they need to ensure that all applications are running during market hours and beyond. They have to keep the lights on.
• Second, they are faced with managing the future versions of this technology, with reduced resources and budget. Do more with less.
• Third, aging technology is surprisingly harder to retire. More often than not, regulation or P&L initiatives are prioritized. Existing systems are kept alive with the lofty intentions of “let’s work on this next year’. If it isn’t broken, it doesn’t get immediately fixed.

Improving efficiency and managing risk

The end result can be an inefficient user experience that drives down market opportunity at the desk.  The trading desk grumbles incessantly about their lack of reliable technology. Technologists and risk managers are facing that criticism with mounting pressure to transform while also keeping the lights on.

For traders and sales, there is an immediate need for instant information access and significant reduction of manual activity to get it, so they can drive alpha with greater efficiency.  For technologists and risk managers, there is a requirement to make sure these applications, and the content that feeds them, can be managed appropriately with the ability to innovate to the future.

For trading firms, that is indeed the Holy Grail—finding a way to seamlessly blend trading workflows and data content with their inventory of applications for straight-through processing and business intelligence. Do that well, and your trading desk will be thanking you for it.