Phy-gital Roundtable: Breakfast Roundup from Germany and Netherlands

02 May '15 | Debjyoti Paul

German Shoppers: Meet Them in the Fast Lane to Phy-gital

15 January '15 | Ralf Reich

Shoppers Will Share Personal Information (But They Don’t Want to be “Friends”)

15 January '15 | Anil Venkat

Modernize or Perish: Property and Casualty Insurers and IT Solutions

14 January '15 | Manesh Rajendran

Benelux Reaches the Phy-gital Tipping Point: Omnichannel Readiness is Crucial

13 January '15 | Anil Gandharve

The New Omnichannel Dynamic: Finding Core Principles Across Industries

13 January '15 | Debjyoti Paul

Technology does not disrupt business – CIO day 2014 Roundup

02 December '14 | Anshuman Singh

Apple Pay – The Best Is Yet To Come

02 December '14 | Indy Sawhney

Digital transformation is a business transformation enabled by technology

01 December '14 | Amit Varma

3 Stages of FATCA Testing and Quality Assurance

06 October '14 | Raman Suprajarama

3 Reasons why Apple Pay could dominate the payments space

18 September '14 | Gaurav Johri

Beacon of Hope: Serving Growth and Customer Satisfaction

05 August '14 | Debjyoti Paul

The Dos and Don’ts of Emerging Technologies Like iBeacon

30 July '14 | Debjyoti Paul

What You Sold Us On – eCommerce Award Finalist Selections

17 July '14 | Anshuman Singh

3 Steps to Getting Started with Microsoft Azure Cloud Services

04 June '14 | Koushik Ramani

8 Steps to Building a Successful Self Service Portal

03 June '14 | Giridhar LV

Innovation outsourced – a myth or a mirage or a truth staring at us?

13 January '14 | Ramesh Hosahalli

What does a mobile user want?

03 January '14 | Gopikrishna Aravindan

Modernizing Trading Systems – A Step by Step Guide (Part 1)

Posted on: 26 October '16

There are many reasons why organizations migrate from their existing trading systems. Listed below is a broad classification:

  • Organizations are constantly seeking to stay competitive and relevant and hence would want to move to the latest trading platform in the marketplace.
  • End of support may be just around the corner for the organizations’ existing trading system
  • Organizations may want to expand their business to new geographies/ products/ pricing of complex derivative products (structured products)
  • There may be significant gaps in terms of security/ audit/ precision/ exposure to risks with the current implementation.

From being terminal-based machines to sophisticated software packages with full spectrum of functionality and coverage, trading systems have evolved rapidly over the past two decades. There are several trading systems in the market today, delivered by a wide array of vendors – some delivering specific/ niche/ mono asset classes to complete set of asset classes(including cross-asset classes/structured products).

Let me explain the five important steps that organizations have to follow for trading system migration.

Step 1 – Audit of existing application landscape

Once organizations decide to migrate from their existing trading systems, they have to go through the process of understanding the current landscape of products/ systems available in the market.

They have to score each of the available products on a variety of parameters like:

  • Product coverage in terms of support for pricing of single/ multiple asset classes.
  • Functionality coverage in terms of support for front office/ back office/ middle office.
  • Advantages and disadvantages of going with single vendor or multiple/ bespoke vendor systems implementation in terms of costs, both capex and opex.
  • Scalability and support for future growth in terms of business volumes and up-time.
Feature/Functionality Vendor 1 Vendor 2 Vendor 3
Front Office      
Pricing – Vanilla
Asset Class-1  
Asset Class-2
Structured Products
Middle Office      
Product Control    
Reporting  
Risk Management  
Back Office      
Confirmation Processing
Settlement Processing

Step 2 – Selection of trading solution package

Once an organization decides to migrate its trading systems to a new platform, there are two possibilities which can emerge:

  • Migrating to higher version of the existing system with the same vendor
  • Migrating to a different system with a new vendor

Organizations typically face a whole gamut of challenges with trading system migration, mainly due to the complexity of these systems which is further complicated with any in-house customization.

These challenges more often translate into major delays during implementation and in turn result in schedule and cost variance.

Another factor which may alter the duration of the project is assumptions/dependencies which might have not been looked into in detail during the course of the project.

A typical example could be the assumption that the same hardware from the existing project would be used for the new implementation as well.

It is vital to validate these assumptions/dependencies periodically so as to avoid unforeseen impacts on project delivery.

As with any new system implementation, even with trading system migrations, we need to take into account the impact to upstream and downstream interfaces/ sub-systems.

A typical trading system

A typical trading system

We will look at the next steps of trade systems migration in my subsequent blog.