Anyone who has followed the financial services industry for an appreciable period of time will know that interoperability issues are a fact of life. They don’t exist because of the ineptitude of the firms that experience them—on the contrary, buy- and sellside firms are generally skillful in the development and deployment of technology to support every aspect of their day-to-day operations. Yet interoperability issues persist across the industry due to a mix of firms’ histories—most capital markets firms have at some point either merged with another firm, acquired another firm or been acquired—which, from a technology standpoint, complicates things. Similarly, technology heads come and go—as do heads of operations, risk, compliance, trading and portfolio management. Firms’ technology budgets and priorities also vary from year to year, which directly impacts their technology stacks, especially when it comes to interoperability.

So, what is the answer? Ripping and replacing incumbent technology might be theoretically possible but, as IT directors or chief information officers would attest, with the exception of non-mission-critical technologies, it’s a practical impossibility. The answer, therefore, lies in the industry’s inexorable move toward modularization and widespread embracing of the open application programming interface (API) movement. Critically, simplified technology stacks and unified data models allow legacy and proprietary technologies to co-exist alongside vendor-supplied, off-the-shelf platforms, with minimal downside to the business.

This rapid read investigates the extent to which firms have optimized their entire trade lifecycles, the structure, challenges and interoperability of their front-office systems, and what they most value when looking to partner with a third-party trading technology provider. The data was gathered from firms within WatersTechnology’s database responding to a seven-question survey.