Investment Operations

Securities Processing Technology: A New Era for Labor Arbitrage?

Counterparty Credit Risk and CVA

Operations team leads are keen to deploy an intuitive and easy-to-use securities processing solution, according to a new Aite Group report.

The back office has never received so much industry attention, and a lot of eyeballs are on the settlement space. Legacy technologies are being considered for replacement, so the key person risk involved in maintaining in-house builds or heavily customized vendor solutions is front-of-mind for many C-suite executives. Aite Group’s latest report, Securities Processing Technology: A New Era for Labor Arbitrage?, examines the dynamics within the settlement operations and technology function, particularly around firms’ usage and perception of vendor technology and services in this area.

“Numerous post-trade platforms are reaching end-of-life status and are becoming more expensive to maintain (old code, lack of programmers,) and although project risk can be high when replacing these platforms, building on top of legacy technology is even riskier in the long term,” explains Virginie O’Shea, research director at Aite Group. “Key person risk will also continue to increase over time. Business cases can be built around the scalability and support a platform is unable to provide that may restrict a financial institution’s growth and client attractiveness in the future,” she adds.

This Impact Report profiles the main vendors offering securities processing technology to both buy-side and sell-side firms, including feedback from reference clients and prospects. It is based on 2017 and 2018 telephone interviews with 31 market participants in settlement operations functions at capital markets firms around the globe. It also profiles 13 solution vendors that are active in the global financial markets—BlackRock, Broadridge, Calypso, Finastra, FIS, Fiserv, GBST, IBM, HIS Markit, Intellect Design, Shadow Financial, Tata Consultancy Services, and Torstone Technology.