Vincent Chase had his boys in LA. Carrie Bradshaw had her girls in NYC. They traveled in packs because each character offered something unique – whether it was Ari’s neurotic personality, or Samantha’s wild rendezvouses. In short, the Entourage wouldn’t have been an entourage without the entire gang. As fictitious as these characters may be, there is something to be said about group dynamics, because more often than not, people work in unison with others. Just look around you – how many of your colleagues have you interacted with today, be it by phone, email or IM?
Firms are continually investing in the technology that sits on traders’ desks. Whether it’s new applications aimed at increasing productivity and efficiency, or new desktop devices that improve connectivity to their contacts, it’s no secret that firms’ primary focus is on the needs of their traders. It’s also no secret that a trader does not work alone. In fact, it is estimated that at the world’s largest banks, there is an average of 3-5 people supporting each trader. This “entourage” may consist of Economists, Research Analysts, Compliance Officers or a variety of other roles. But they all share one common denominator: assist the trader and guide the trade through its lifecycle as efficiently as possible.
With the dynamic nature of today’s financial markets there is an ever growing need to connect these “non-traders” directly into the trade lifecycle. While the drivers may vary, the need is constant. For example, regulatory changes like Sarbanes Oxley, MIFID and Dodd-Frank have helped highlight the need for financial institutions to increase transparency across the trade lifecycle. But let’s face it, regulations or not, firms are constantly looking for an edge to differentiate themselves and remain competitive. One way to achieve this is by improving their internal communications infrastructure to enable their teams to communicate better, smarter and faster than ever before.
To borrow a page from MasterCard’s “priceless” ad campaign:
- Lack of transparency across the trade lifecycle: $2,000,000,000 in trading losses and a speaking engagement with the US Congress
- Improperly executed futures trades: $6,750,000 in CFTC fines
- Enabling all traders, trade support and compliance staff to seamlessly and instantly communicate across the entire trade lifecycle: Pricele$$
Mitigating post trade issues by plugging compliance and risk groups into the trade lifecycle earlier not only reduces costs, but also provides a superior product to the firm’s customers. Both the regulatory and competitive drivers combined, create a perfect storm of requirements for increased collaboration, as well as a unified management interface, for both front and back office users. Many firms are now requiring the ability to manage traders and off floor users from a single platform, to audit usage and apply policy uniformly across their entire enterprise. This helps firms reduce the amount of backroom equipment while providing them greater control over the "how and who” of information dissemination. Additionally, this helps firms save significant amounts of money by eliminating racks of costly third party equipment in the backroom, non-integrated end user devices and the associated maintenance cost of each.
While the future of the market is anyone’s guess, what we do know is simply this: collaboration is key. Traders alone are a pretty powerful force, but with the backing of their entourage, they just might become a force to reckon with.