Podcast by FTF News
The FTF Exchange Podcast FTF News
Podcast by FTF News
Client Reporting Is Anything that Touches Clients’ Hands
For this podcast, Alex Strekel, director of investment management solutions for Clearwater Analytics, focuses on the best definition of client reporting for 2023 and many other matters.
When asked to define client reporting, Strekel acknowledges that he takes a broad view of client reporting from his days working as a portfolio manager.
“I think about client reporting as anything that touches the hands of the client,” Strekel tells FTF News. “So, anything that a client is going to access via a Web portal, anything they’re going to access via paper … they’re going to hear from you as the manager of the portfolio or the relationship,” he says. “Any time you’re talking about performance with a client, right, you’re reporting to them.”
Based in Boise, Idaho, Clearwater Analytics is a software-as-a-service provider of automated investment accounting, performance, compliance, and risk reporting for insurance companies, asset managers, banks, and other institutions. In 2022, Clearwater won the Best Client Reporting Solution award as part of the FTF News Technology Innovation Awards competition. The company has been nominated for the same honor for 2023.
This podcast also covers:
How a challenging economy changes the creation and delivery of client reports;
How firms provide scalability to the new way of client reporting;
The friction that remains between the best-of-breed & all-in-one approaches of providers;
How a firm can provide best-of-breed and all-in-one to clients, and facilitate flexibility for client reporting;
The best way for firms to decide which technology options are the best for client reporting;
And how client reporting will get more complicated over the coming years.
NRI Melds IT & Business Process Outsourcing
In this edition of the FTF Exchange podcast series, Sue Sato from the Prime Settlement Services (PSS) department at Nomura Research Institute (NRI) focuses on why NRI is offering a combination of IT outsourcing, also known as ITO, and business process outsourcing or BPO.
NRI provides system solutions and consulting services such as management consulting, systems integration, and IT management and solutions for financial services and other industries.
NRI has offices in New York, London, Tokyo, Hong Kong, Singapore, and Australia.
Sato, whose efforts are focused on North America, takes questions from FTF News about the components of this combined offering and why it was done.
Trading Models Get a Quantum Leap via Machine Learning
For this podcast, Alexander Sokol, founder, executive chairman, and head of quant research at CompatibL Technologies, focuses on how trading and risk models are getting an exponential boost from machine learning.
For instance, the standard models for interest rates are based on incremental changes in rates but those models are falling short now as rates are in turmoil across the globe as central bankers raise rates to drive down inflation.
“So, the new model types that we developed, which are called Autoencoder Market Models, are based on training the models to the entire history of interest rates not only for the currency we are modeling but also across all other currencies. This historical data that we are training our model to represents all kinds of market regimes,” Sokol says. “So, by training the model to all of the rates regimes across all currencies, these models become more effective following the change in market regime.”
Essentially, the models using machine learning can look back in time to find conditions that could be similar to current conditions. By taking that history into consideration, the new models can be more accurate.
The interesting fact is that this is just the start, Sokol says. Once financial services firms have laid the groundwork through cloud computing and other forms of modernization, then firms can start to explore variational autoencoders and other innovations at a time when they might need them the most.
The podcast also covers:
A definition of a variational autoencoder (VAE) and CompatibL’s Autoencoder Market Models (AEMM);
How machine learning-enabled models might help with interest rate portfolios, managing limits and add-ons, and credit exposure concerns; and
How cloud computing and the push for digital transformations are helping to advance autoencoder-based models.
CompatibL is a trading and risk solutions provider that Sokol founded in 2003.
In 2022, Alexander was voted FinTech Person of the Year via the FTF Awards competition. CompatibL also won the best digital transformation solutions provider in 2022.
Platform Lock-In May Be Driving Up Data Costs
The cost of data is exploding for securities firms and that may be due to inflation and firms being locked into a data platform that sometimes comes from the same data provider, says Roy Kirby, head of core products at SIX, in the latest edition of the FTF Exchange podcast from FTF and FTF News.
“I would say that now we’re back in an inflationary environment. I think that some larger companies are … locked into software platforms that are also provided by data providers. And some of those data providers are maybe taking advantage of the inflationary environment to pass on some very large yearly increases to the end customer,” Kirby says.
“That’s one thing. I think the second thing is the regulatory landscape that we live in the financial world is still very fragmented. The regulations are asking for very similar in slightly different ways and sometimes overcomplicating and overlapping data points are needed,” he says.
Another part of the problem is that financial institutions often use a project-based approach to meet regulatory requirements, which increases their cost-base from year to year, Kirby says.
To counter rising data cost, firms can streamline their data management costs and find opportunities to maximize their data budgets.
“I think one thing they can continue to do is to investigate internally and look across projects for common standards and common data linkages,” Kirby says. Firms can see “how they can link them together rather than run them as separate siloed projects.”
For example, when firms are gathering ESG and cryptocurrency data, the related fund data could be taken in once and used many ways, Kirby says.
“The other way is a very traditional way to cut costs and that’s to really look at your data management platforms,” he says. “Look at them and think how you can maybe split your data management platform from your data provider because if you lock yourself in too much the data provider might increase their costs over time.”
The podcast also covers:
How firms can use data visualization to better understand and control their data usage;
Why data visualization appeals to younger staff members; and
How to transform an operations effort from data-heavy cost center into a revenue opportunity.
SIX is a provider of financial data and services for the financial services industry. The company offers core reference data about securities, prices, corporate events, tax and regulatory data. It is also known for its flagship indices and bespoke benchmarks.
Earlier this year, SIX won the Best Data Provider award in the FTF News Technology Innovation Awards. The Best Data Provider award honors the company that offers the most comprehensive global coverage in a timely manner and with a user-friendly, consolidated view. The winner in that category was seen by the voters to have a complete offering that lowers operational risks for clients.
Clients Are Driving the Digital Evolution
Banks, broker-dealers, buy-side firms, and other capital markets participants are getting closer to their digital transformation goals as they put clients at the center of their journey, says Marc Natale, head of presales and marketing for America at Murex, a provider of financial software for trading, treasury, risk, and post-trade operations. Earlier this year, the Murex MX.3 platform won Software Solution of the Year in the FTF News Technology Innovation Awards.
“We observed over the past two years a clear shift in the way firms think about their capital markets ecosystem, their architecture, and how they approach technology vendors like Murex,” Natale says via the FTF Exchange podcast.
“It’s a clear indication that they are getting closer to their digital transformation goals,” Natale adds. “Most firms are switching from a very much product-centric approach to a client centric approach — and the client’s user experience is really at the center of this evolution. And that translates into many financial institutions requesting from vendors that their platforms have more advanced and more robust APIs.”
In practice, firms “have to follow standards. They have to provide documentation as code … to avoid any learning curves on how to technically use APIs and they can insure that a working prototype can be reached in just a matter of hours,” Natale says.
The podcast conversation also covers:
Whether firms might halt their digital journey because of market uncertainty;
Centralization and consolidation for trading, risk management, and related systems;
When to consider a wholesale, re-platforming effort;
When firms must consider accommodating client demands for crypto and digital asset transactions; and
How the digital push has impacted the way Murex interacts with its clients and what aspects have not changed.
Ops Consolidation Could Ease Cost Pressures for Firms
Cost pressures are dominating the agenda for many securities firms and they are likely to be seriously considering new ways to consolidate their post-trade operations, says Brian Collings, CEO of Torstone Technology, via a new FTF Exchange podcast.
The new consolidation can take several forms and will be impacted by major market changes such as the push for shorter, T+1 and T-0 settlement, Collings says.
There can be an operations consolidation across assets such as a common middle office for equities and fixed income instruments. There could also be a consolidation across countries and regions – some firms may even consolidate globally and use a single platform. Collings also sees consolidation across functions.
“I think all those pressures are forcing people to think about a new operating model. I think that new operating model is how do you consolidate more than you have in the past,” Collings says.
The podcast also covers:
Torstone’s inroads into the retail trading and discount brokerage space;
What Torstone is seeing as far as crypto-based and other digital instruments; and
The middle office changes coming for firms that trade securities and are ripple effects on the front office.
Torstone’s cloud-based post trade solution for the back office won the Best Innovation in Clearing & Settlement Solution award at the FTF News Technology Innovation Awards for 2022. The latest win marks the third time that Torstone won the honor as it swept the category in 2019 and 2018.