Innovation in Focus: The Future of Cash Equities Trading Operations

Radical Ideas for Cost Restructuring
by David Easthope, June 3, 2013
Operations/ Benchmarking
Asia-Pacific, EMEA, North America

Abstract

Leading brokerages must embrace technology outsourcing in order to radically reduce cost structures in equities trading. There are a number of technology firms offering innovative ways for brokerages to make real structural changes and reduce ongoing expenses in line with the foreseeable market opportunity.

The equities business has persistently low growth in revenues, stubbornly high costs, and capacity challenges. As a result, managers are no longer tolerant of high IT and operational costs.

In The Future of Cash Equities Trading Operations: Radical Ideas for Cost Restructuring, Celent illustrates three innovative strategies to reduce costs in the equities franchise for front office IT and operations. These strategies conveniently fit with how environmentalists approach their own questions of efficiency with resources, through the concepts of reduce, reuse, and recycle. This Innovation in Focus report is part of Celent’s ongoing series.

“We believe brokerage firms must think the unthinkable with respect to reducing costs through outsourcing,” says David Easthope, Research Director with Celent’s Securities & Investments Group and author of the report. “It is far better to assume that any and all IT can be outsourced than to assume none can be outsourced at all.”

This 10-page report contains one table.

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

 

The Environment

1

 

Think Like Environmentalists

1

 

The Appeal of IaaS and Managed Services

2

 

The Cloud

2

Introduction

3

 

Market Context: Poor and Getting Worse

3

 

Innovation: What It Looks Like

3

Three Innovative Strategies to Reduce Costs

4

 

Reduce

4

 

Reuse

4

 

Recycle

4

Recycling IT: Think the Unthinkable

6

 

The Appeal of IaaS and Managed Services

6

 

The Cloud

6

 

Mid-Tier and Regional Firms Can Outsource Even More Functions

7

Conclusions

8

Leveraging Celent’s Expertise

9

 

Support for Financial Institutions

9

 

Support for Vendors

9

Related Celent Research

10

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