AMERICAS TECHNOLOGY Insight, not myopia What does this insight include? Monitoring system health (e.g. am I connected to the SEF?) should be a given for any modern technology infrastructure. Monitoring latency gives insight to the trading desk that the prices they are seeing, as well as making, are rational. Traders will want to know if they are falling behind – either in SEF price feeds or, for example, in responding to client RFQs. And finally, analytics of SEF price and order data can give trading desks the confidence that they are adequately navigating the new market structure. For example, some SEF order books may become “toxic”, as liquidity at certain price points evaporates. This insight is only available by monitoring these flows, and applying appropriate analytics. Rome wasn’t built in a day. Arguably, a market structure isn’t as complicated as an empire, or even a city; but there are bound to be problems when you create a whole new market landscape at a stroke. Swaps traders don’t have the luxury of figuring it out as they go, while the market evolves around them – as those in the equities (and other) worlds have. That’s not to say that the new regulatory requirements, or the speed of their implementation, are good or bad; but the sheer complexity of the task makes it all the more crucial that systems are properly monitored and stable from day one. New swaps empires may have to be built in a day, but proper technological oversight is needed to ensure they won’t crumble just as fast.
Mark Brennan ITRS Group
Insight, not myopia What does this insight include? Monitoring system health (e.g. am I connected to the SEF?) should be a given for any modern technology infrastructure. Monitoring latency gives insight to the trading desk that the prices they are seeing, as well as making, are rational. Traders will want to know if they are falling behind – either in SEF price feeds or, for example, in responding to client RFQs. And finally, analytics of SEF price and order data can give trading desks the confidence that they are adequately navigating the new market structure. For example, some SEF order books may become “toxic”, as liquidity at certain price points evaporates. This insight is only available by monitoring these flows, and applying appropriate analytics. Rome wasn’t built in a day. Arguably, a market structure isn’t as complicated as an empire, or even a city; but there are bound to be problems when you create a whole new market landscape at a stroke. Swaps traders don’t have the luxury of figuring it out as they go, while the market evolves around them – as those in the equities (and other) worlds have. That’s not to say that the new regulatory requirements, or the speed of their implementation, are good or bad; but the sheer complexity of the task makes it all the more crucial that systems are properly monitored and stable from day one. New swaps empires may have to be built in a day, but proper technological oversight is needed to ensure they won’t crumble just as fast. Summer 2015
57