Transformational Change

Enabling global trading communities through electronic connectivity.

Introduction to Critical Connectivity

Electronic trading, and the global inter-connectivity that enables it, has re-defined global capital markets in this century. What began the 2000s as a loosely-dependent collection of isolated domestic markets has transformed into a global trading community of symbiotic markets. These markets may be exchange-based, or not; they may be dark or lit. They cross asset classes and jurisdictions to encompass all market participants and the ecosystem of end-to-end supply chain partners that facilitate the trade process.

In a single generation capital markets have moved from open outcry and telephone trading, to electronic click-and-trade and fully-automated, straight-through processing in which a human is not involved in any step of the trade from analysis, to decision-making, to trading, clearing and settlement.

While trading volume occasionally fluctuates in its growth, market data rate growth seems ceaseless. For example, this century has seen the capacity of the Options Price Reporting Authority’s systems increase by more than 400,000% from their 3,000 messages per second data rate at the turn of the millennium.

It’s not just the sheer volume of data that presents challenges. Traders are drawing from new types and sources of data for making decisions. They’re moving beyond structured data to explore all the news and unstructured web, Twitter, Facebook, and other content available today. Traders use smartphones, social media and other connecting utilities in all aspects of their lives and expect to be just as connected at work.

The beginning of the 21st century has witnessed an unprecedented transformation in financial markets driven by technology, market upheavals and regulation. Today’s markets pose growing challenges of scale, diversity and risk, while traders need to connect to an increasingly diverse range of counterparties, venues and electronic services geographically dispersed around
the world. In this context, successful trading strategies depend as much on agility as they do on speed.

Connectivity is the great enabler that facilitates access to the diverse data sources and business partners that turn ideas and algorithms into successful trading strategies. Connectivity is also about synchronized service excellence across a highly dynamic supply chain that changes trade by trade, focused on effective self-service and seamlessly supported by responsive expertise centers. Connectivity is about turning business relationships into business success.

Global companies now recognize that consolidating connectivity assets can turn technology infrastructure costs into business opportunities. Smaller, local and regional firms are leveraging their connection to respond to rapidly growing demand for local expertise. Financial connectivity allows market participants of all sizes to contribute to the transformation of global markets and to access growing global demand. Understanding these trends can empower firms to choose the best long-term partners for growth.