Sybase Survey Finds Competitiveness and Need for Speed Blurring Lines Between Front and Middle Office for Trading Community
Challenges of Merging Front and Middle Office Outweighed by Business Advantages While Keeping Trading Models Up to Date Remains a Major Burden
NEW YORK, N.Y. - Sybase, Inc. (NYSE: SY), an industry leader in enterprise and mobile software, today announced results of a survey showing that increasing demands for competitiveness and the need for speed are altering the front lines of trading, putting increasing pressure on algorithmic models and blurring the lines between the front and middle office. The key findings, stemming from a survey of attendees during last month’s SIFMA Technology Management Conference 2010 in New York, echo results from another Sybase® survey conducted at TradeTech 2010, a major trading technology conference held in London last April.
More than 100 respondents from the two conferences shed valuable light on the latest trends shaping the capital markets industry. Merging front and middle office has challenges, yet they are clearly outweighed by the business benefits. As the lines continue to blur between front- and middle-office functions, six out of 10 respondents (60%) are seeing clear demand for a tick database to be closely associated with their front-office trading strategies. In a closely related finding, nearly half of respondents downplayed risk to the model creation and execution process imposed by using separate environments for development and production. Executives participating in the survey frequently pointed to increasing efforts within their own businesses to bring these environments closer together.
“When we polled executives at SIFMA during the depth of the credit crisis in 2008, the majority of respondents cited the ability to analyze execution risk in real-time as job one and a crucial competitive differentiator,” said Sinan Baskan, Senior Director of Business Development, Financial Services, Sybase. “We’re now seeing the imperative of performance re-asserting itself within the context of front- and middle-office consolidation.”
Algorithmic and high frequency trading (HFT) comprise the trading platforms for 85% of respondents, with six out of 10 respondents employing quant models in particular. Keeping trading models current is a major challenge. The heavy use of algorithmic models in HFT environments helps explain why a combined 89% of respondents describe the feeding of their models with multi-frequency data rates as either “important” (65%) or “very important” (24%). While more than half of respondents (55%) said their trading models are up to date, 28% said they are not—with 68% of that group saying their models will be out of date within three to six months.
“We’re finding a consistent need for multiple groups to access both historical and real-time data concurrently,” said Adam Honore, Research Director, Aite Group. “Further, the scope and quantity of information is always changing as people dive deeper into market microstructure, add liquidity venues, and move between multiple asset classes.”
Some 65% of respondents claim to be satisfied with their ability to capture data from trading systems for audit, compliance or future analytical purposes. However, just over a quarter (28%) said they are struggling to accomplish this, leaving it uncertain whether that number will shrink any time soon.
Sybase technology is used by 24 of the top 25 global banks and 46 of the top 50 global banks and securities firms. Sybase financial solutions include advanced data management and analytics that improve trading, risk management, compliance and market data management across the enterprise. For more information on Sybase’s Capital Markets industry solutions, visit: www.sybase.com/capitalmarkets.
Sybase is an industry leader in delivering enterprise and mobile software to manage, analyze and mobilize information. We are recognized globally as a performance leader, proven in the most data-intensive industries and across all major systems, networks and devices. Our information management, analytics and enterprise mobility solutions have powered the world’s most mission-critical systems in financial services, telecommunications, manufacturing and government. For more information, visit http://www.sybase.com. Read Sybase blogs: http://blogs.sybase.com.
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