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Neha Singh, Vice President, Product Strategy and Innovation.
I’m delighted to open this version of our Capital Markets newsletter. Spring is my favorite time of year because it brings warmer weather and a striking change in foliage, all because the Earth has a tilt and has moved in its orbit. It reminds me how a subtle but deep shift can lead to dramatic change. We are doing something similar with trade lifecycle simplification.
For years, Capital Markets firms have grappled with fragmented, legacy systems that have been built (or acquired) piecemeal over time and thus lack integration across the front, middle, and back offices. Many firms have multiple order management systems which, in turn, connect to multiple middle and back office systems, creating thousands of point-to-point connections, each with their own data model.
The current approach is unsustainable. Firms are being challenged to do more with less, whether on the trading desk or in the back-office. The lack of cohesiveness and clarity across the front, middle, and back office is costly, inefficient, and unnecessarily risky. It also inhibits agility and growth as firms struggle with issues like compressed settlement cycles, accommodating multi-asset strategies, or using evolving technologies such as artificial intelligence. The need to make a change has taken on even greater urgency as volatility continues, volumes rise, regulations tighten, and pandemic uncertainty persists.
The answer is a shift in how we view the front, middle, and back-office. Rather than disparate pieces, we need to view them holistically across the entire lifecycle. The key to making this change is having all speak a common language (i.e. data and messaging) and share information across the trade lifecycle. For example, if reference data has been normalized across the trade lifecycle using a common data model, this should eliminate mismatches between the front and back office data and lead to fewer breaks that require manual reconciliation. Sounds simple and intuitive, but the challenge is, of course, how you implement such a solution given the complexity of several front, middle, back systems and limited industry expertise in taking a holistic view across the trade lifecycle.
At Broadridge, our focus remains on investing in capabilities that help our clients simplify their ecosystem, from the front office all the way through to post-trade processes. Our acquisition of Itiviti, a leading provider of trading and connectivity technology to the capital markets industry, has been one of the linchpins of this strategy. By bringing these sophisticated front-office solutions together with existing post-trade solutions, Broadridge now has a unique vantage point to help Capital Markets firms look across the full scope of the front, middle, and back-office, and solve fragmentation problems at the source.
Our approach to simplifying across the trade lifecycle involves investing in a common messaging layer to connect systems efficiently, and a common data model, so all systems are speaking the same language, to reduce fragmentation, friction, and costs. In addition, we focus on the sharing of previously siloed data in two directions: front office data flowing downstream (e.g. for regulatory reporting) and back-office data flowing to the front office (e.g. real-time view of risk, positions, margin) to help trading desks make better decisions.
Without simplification, firms face friction in their day-to-day – for example, having to aggregate that data from multiple systems and silos. According to the 2022 Broadridge Digital Transformation and Next-Gen Technology study, only 20% of capital markets firms had reached the advanced stages of creating a central data platform with access to data across siloes. Firms will need to implement significant changes to remove the friction. But the benefits of simplification will be well worth making this shift. Firms can achieve lower costs, faster processes, enhanced agility, more accuracy, better trading decisions, and better controls. All of this adds up to potentially higher revenues, expanded margins, and lower risk.
This type of simplification is an evolution, not a revolution. Each firm has a different starting point on this journey, a different risk appetite around speed and change, and different perspectives on how they structure their journey. With our enhanced capabilities, Broadridge can provide a critical solution for firms that are grappling with outdated systems. We have the answer for firms looking to confidently embrace the future and thrive in a challenging environment. We invite you to learn more.
Wishing you a wonderful spring season,
Vice President, Product Strategy & Innovation, Capital Markets
Vice President, Product Strategy and Innovation
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