While some may believe that electronic trading systems will make the telephone obsolete, others point out that the reality is just the opposite. "It's a myth that phone-based trading will become less important," emphasizes Kevin McPartland, senior analyst with Tabb Group. "Trading is still a relationship business."
In fact, the convergence of voice with electronic systems enabled by the Internet Protocol is poised to take trading to new heights, according to McPartland. "It's exciting that the efficiencies IP telephony promised for years are finally being realized," he says. "For example, linking your CRM system with IP telephony permits a client's portfolio to open as soon as the phone rings." Over the course of thousands of calls, this feature alone can quickly add up to an advantage.
Further, McPartland asserts, the debates over IP telephony call quality, bandwidth and required network tweaking are so yesterday. "The maturity of the technology has come a long way over the past couple of years," he insists. "IP telephony is now being delivered at enterprise scale."
New Tools for a New Generation
At the same time, a new generation of traders is coming on the scene. "Because they were weaned on technology, this generation is eager to adopt new productivity tools," McPartland says. "And, in turn, technology affinity will fuel innovations that combine on-screen trading with the phone, leading to the creation of one big communications hub."
Although it began as a business continuity project, just such a transformation is under way at New York-based Gilder Gagnon Howe & Co. (GGHC), a 90-employee investment advisory firm and brokerage with seven traders and $5 billion in investments under management. "When we started in early 2009, our goal was updating our disaster recovery site in New Jersey," explains Sha Ali, a partner with GGHC. "At the time, the communications infrastructure at the site supported only two traders, which meant we had to choose which ones could relocate." In addition, the facility's legacy trading turret featured an antiquated and unfriendly user interface.
But the DR site's insufficiencies were problematic beyond the implications for an actual disaster, Ali says. "Since traders relocate to the site every quarter for testing, employee dissatisfaction was an issue on an ongoing basis," he relates. Dissatisfaction with the facility also led to its underutilization as a remote work site. GGHC hoped that improvements would encourage the traders who live near the site to use it more often, thereby driving up productivity, Ali explains.
After evaluating several options and vendors, GGHC settled on a combination of updates and new technologies from its long-time partner IPC Systems (Jersey City, N.J.). First, GGHC upgraded to the latest version of IPC's IP-based Enhanced Voice Service solution and Nexus interconnect suite, which supports resource sharing and collaboration. Then SIP (Session Initiation Protocol) communications capabilities were updated to include more private lines. These enhancements allowed up to 16 traders to work at the DR site immediately, with the capability to scale up to 30, Ali reports.
Three new IPC technologies also were adopted, according to Ali. First, the vendor's Enterprise Administration Server (EASe) solution provided improved redundancy and fail-over capabilities. Plus, it enabled traders to log in from the DR site and retrieve the same personalized profile available on their regular desktops. The second solution, Advanced Fault Management (AFM), supplied enterprise-class systems monitoring and alerts for proactive troubleshooting.
The final solution, MAXaccess 1000, is a soft-turret solution that offered numerous advantages. "Soft turrets would permit our traders to work from home or their mobile devices," says Ali. "Plus, at a trader's regular desktop, some feeds could be moved from the computer display screen to the SIP phones. This would allow traders to focus on the phone call while simultaneously viewing other important information, including video or other types of dynamic media."
With the exception of the soft turrets, the various solutions were installed and tested during fall 2009, with a transparent rollout occurring in early 2010, Ali relates. GGHC decided to delay implementation of the soft turrets, however, until an expected upgrade to the user interface. "The usability and user interface are a bit too complicated for our non-technical traders," Ali explains. "We have discussed the situation with IPC and are looking forward to improvements."
Resilience and Mobility Pay Off
Still, the remaining solutions have exceeded GGHC's original goals. "Our trading systems are significantly more resilient," asserts Ali. "Plus, when traders relocate to our DR site, their turret profile is identical to our production system. This alone has greatly increased user satisfaction and productivity."
Thanks to the enterprise monitoring system, the GGHC technology team also is more efficient and effective. "Previously, we'd find out about a network issue the same time as our users," Ali says. "Now we receive an alert in advance and can log in remotely to correct the problem before it affects users. In addition, we receive system health reports every morning, which enables us to make adjustments proactively, before issues arise. In short, the AFM solution definitely goes a long way for us."
With business continuity and scalability solutions in place, GGHC is beginning to work on next-generation applications. This includes installing a Wi-Fi network in anticipation of eventually rolling out the soft turrets. "Ultimately, we want traders to be connected wherever they are," Ali says. "This includes within the offices that are spread across three floors of our building, as well as offsite."
Improved mobility and productivity are themes for many Wall Street firms, according to Tabb's McPartland. And, he says, IT budgets are being funded to match. "The upside of the credit crisis is that it's causing firms to rethink their infrastructures as a whole," McPartland says. "Instead of just the sexy stuff, other types of projects that demonstrate positive efficiency and ROI are receiving higher priority than before."
Post-crisis competitive pressures also are causing financial firms to place more emphasis on technologies that improve collaboration, according to IPC VP for product marketing Jonathan Morton, whose company supports thousands of traders on six continents. "We're seeing a stronger need for traders to collaborate more closely with their middle- and back-office colleagues, including risk, compliance, research and portfolio managers," he says. "As a result, we expect that more communications applications that address collaboration across the enterprise will be introduced during the next few years."