Exchange Technology Services: Addressing New Challenges

by Anshuman Jaswal, PhD,  Brad Bailey, June 1, 2016
Vendor Reviews
Global

Abstract

Celent has released a new report titled Exchange Technology Services: Addressing New Challenges The report was written by Brad Bailey, research director, and Anshuman Jaswal, senior analyst in Celent’s Securities & Investments group.

The economic environment in the last decade has been quite challenging. Trading volumes have declined across all asset classes and geographies. The increase in regulation, along with higher margin and collateral requirements, has also adversely affected the market. Against this backdrop, the leading global exchanges have to perform a fine balancing act. They have to sustain the higher cost of regulation and risk and collateral management, while investing significant amounts in improving their technology platforms.

The global exchanges are served by technology vendors that have to compete for the few big-ticket deals every year, and this leads to market uncertainty. There are only a few large and medium-size exchanges with significant technology budgets and willingness to use external vendors, so there is a lot of competition, and smaller vendors struggle to survive. 

Regulatory and market changes have led to major technology upgrades at most exchanges and post-trade firms, as they seek to build modern capabilities by replacing legacy systems. Large Tier 1 players with strong technology capabilities are offering technology outsourcing solutions to clients who lack the time, resources, and technology capabilities to comply with changing regulatory requirements.

“Blockchain technology has significant potential for disruption, but the key question is when it would be able to be disruptive,” said Bailey. “For exchanges and vendors serving the space, it is important to ready themselves for the upcoming changes.”

“Firms need to respond to regulatory changes and innovation in their business quickly and cheaply,” commented Jaswal. “Exchanges that were spending a large proportion of their expenditure to acquire low latency technology earlier are now changing their focus to addressing regulation-related technology requirements.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

 

Key Findings

1

introduction

3

 

Key Research Questions

4

Market Overview

5

 

Recent Trends

5

 

Issues with Industry

6

 

Expected Impact of Blockchain Technology

7

Market Response and IT Spending Growth

8

Vendor Products

10

 

Cinnober

10

 

LSEG MillenniumIT

11

 

Nasdaq

12

 

Other Vendors

13

Client Feedback

14

Conclusion

15

Leveraging Celent’s Expertise

17

 

Support for Financial Institutions

17

 

Support for Vendors

17

Related Celent Research

18

Sign in to download reports and access personalized information