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Trading Technology

11:35 PM
Don Bell, Senior Vice President of Marketing and Corporate Development, IPC
Don Bell, Senior Vice President of Marketing and Corporate Development, IPC
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The Promise of Enterprise VoIP

Financial institutions have long become accustomed to leveraging their data networks and resources across their entire corporate enterprise.

Financial institutions have long become accustomed to leveraging their data networks and resources across their entire corporate enterprise. Logging on to the desktop remotely and accessing files - regardless of your location and as if you were at your own desk - is commonplace and, in fact, expected in this highly mobile, fast-moving business environment. However, despite advancements in technology, the voice environment, particularly as it relates to the very sophisticated arena of the trading floor, has largely remained stationary.

In the world of voice communications on the trading floor, resources are fixed and largely constrained by geography. Not only does this limit mobility, it exposes institutions in terms of their flexibility and ability to deal with outages and business disruptions.

Most trading floors today are built around a site-centric architecture with point-to-point connections. Each trader has a dedicated desktop device with dedicated voice circuits located on a single trading floor. Resources cannot be shared across sites on a regular basis or even in emergency situations.

Today, the voice world remains, for the most part, as it always has been. Voice over Internet Protocol solutions have been available on the trading floor, but only in a limited way. The technology is relatively new and, therefore, exciting, but it hasn't really presented any tangible enterprise benefit. The promise of that technology has not yet been fully realized ... that is, until now.

As of today, the benefits of the flexibility and sharing of resources common in the data environment have become more feasible in the voice environment. Financial institutions are beginning to deploy a robust set of flexible solutions that have significant implications for the application of VoIP on the trading floor.

In fact, not only is it now possible to consider the distribution of voice resources across the global enterprise, it is possible to take the first step toward the industry goal of a more virtualized trading environment, in which resources will be available when they are needed, where they are needed, and will not require human intervention. This isn't science fiction - the move along this continuum has begun.

The following new advancements and capabilities are beginning to lift the constraints for the use of VoIP on the trading floor:

-Station redirect capabilities make it possible to redirect automatically any trading position to another back-office switch. This ensures continuous operation, no matter the circumstances.

-Single system/distributed back-room platforms give traders full access to all system resources, therefore reducing the impact of potential component failures. For instance, any switch-room component failure will affect only a portion of a trading floor so as not to disrupt the entire operation.

-Thin building architectures allow for the physical separation of front and back rooms so that the back-office switch can be located in a hardened data center far from the highly visible front-office site.

-Enterprise voice services are IP-based and deliver a single voice circuit to multiple trading floor locations simultaneously. They are designed to meet financial institutions' specific requirements for robust business continuity and to work within a hybrid TDM/IP environment in order to meet the realities of the current communications environment.

VoIP and the Mitigation of Risk

Across an entire institution, the benefits of more-intelligently applied VoIP on the trading floor are compelling. These benefits go way beyond the simple cost efficiencies most people associate with VoIP. First and foremost, however, may be the ability to use fewer resources to achieve more efficient and effective business continuity planning (BCP).

With regulators, clients and shareholders demanding more and more robust continuity plans, VoIP is now being applied in a way that is helping firms significantly reduce risk while removing resource-relation restrictions. For instance, the introduction of hot-hot trading floors significantly expands the landscape of choice for BCP, opening up the possibility of a whole new level of effective and efficient protection.

Essentially, the hot-hot trading floor concept eliminates the need for a financial institution to invest in backup sites that only will sit empty, waiting for the unfortunate case of a disaster. This cuts operating costs, streamlines business continuity capabilities and increases the robustness and flexibility of the overall enterprise.

Resources Where You Want Them

Another important benefit is flexibility of deployment. Financial institutions no longer are locked into a standard deployment architecture. Suddenly, they have a range of alternatives. Where should we put our back room? How many back rooms should we have?

This opens up a multitude of possibilities that couldn't have been considered in the past, and it is the power of VoIP technology that makes it possible. More and more firms are beginning to take advantage of the possibilities in order to customize a setup that suits their individual business needs.

For instance, a large global order execution specialist recently reengineered its U.S. trading floors setup. The firm deployed VoIP-enabled desktop turrets across all of its U.S. trading floor sites, supported by two back-office switches. This new possibility of separating the front from the back offices helped the organization achieve significant space and cost efficiencies. Now, in case of emergency, the firm will be able to replicate its entire voice trading environment on any of its other trading floors via VoIP technology.

Free the Traders!

Another long sought-after option - on more of an individual scale but still of importance - is user mobility. Finally, the limitation of geography has been lifted for those who have traditionally been chained to their desks.

Solutions that address this requirement are being deployed today utilizing VoIP technology. Traders now can access their own customized "home" trading position exactly as it would normally appear - including exact button layouts and unique connections to counterparties. This is possible any time, anywhere. Firms also can manage administration and all associated information via Web-based tools.

Operational Efficiency Gains

Communications resource sharing is another goal for many financial institutions, as well, and many are looking to this area of the business for cost efficiencies. The good news is that solutions are available today that allow for numerous trading room systems to be supported by just a few back-office switches. Additionally, VoIP-based voice grade private lines can be delivered simultaneously to different trading floors. In these examples, resources can be used much more flexibly and efficiently.

A Few Words on Implementation

As an institution seeks to make the most of these new capabilities, it is absolutely essential that projects be implemented in a logical, planned environment. As a firm moves from a single site to a multisite solution, implementation becomes more and more complex as the variables increase. The trading floor is not the place to take technology chances.

At the outset, firms must carefully choose the right VoIP solutions for their operations. Look beyond the hype, look under the hood, kick the tires. Be sure what you're getting is the highest quality and also that it is completely secure.

And choose your partners wisely. Look for a partner who not only has proven expertise in VoIP technology, but one who also can offer practical advice and guide you down the right path as the implementation progresses and your firm's application of the technology expands. Don't simply ask what is available now, but also be sure that you understand the provider's road map for the future to be sure it is compatible with your own.

VoIP solutions for the trading floor are rapidly and finally coming of age. The trading organization of the future is even more responsive, more mobile and more resilient, and the goal of one day realizing the ultimate - the single, global, virtual trading floor - is closer than ever.

About The Author

Don Bell is senior vice president of Marketing and Corporate Development for IPC. Bell has helped a wide variety of organizations expand their market leadership, including Clearwire Technologies and Goldman Sachs. He serves on the board of directors of Purple Voice Holdings Limited, a B2B Internet Protocol software company that provides VoIP solutions to the financial community.

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