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Why”Wall Street” and “Trading Turret” Don’t Mean What They Used To

Friday, 25. March 2011 13:12

When you see the term “Wall Street” what does it bring to mind? Of course, besides the film that captured the zeitgeist of 1980’s excess?

A quick read of the entry on Wikipedia states:

Over time Wall Street came to signify a geographic location encompassing a commercial downtown Manhattan neighborhood as well as signifying the historical financial center of the United States. The term has become a metonym signifying New York-based financial interests.

That word metonym really stands out. A metonym is a figure of speech in which a thing or concept is not called by its own name, but by the name of something intimately associated with that thing or concept. We know that physical proximity to Wall Street is no longer critical for the reasons it once was (physical exchange of stock certificates among trading partners) and that no matter the actual address of the NYSE, it exists as much in data centers that are many miles away from the iconic exchange floor we see on CNBC each day.

Another example of a metonym in finance is “hedge fund.” This term is now broadly applied, by many in the circles in which I travel, to any boutique-size financial firm, irrespective of whether the company is a hedge fund or not. And finally, we have the word “trader.” A catchall really for any person involved in the capital markets.

The word “trading turret” is becoming a  metonym for whatever communications instrument is on the desk in the various types of trading rooms around the world. Just as the term “trader” is loosely applied to everyone from floor brokers to portfolio managers to research analysts and anyone who may work on a trading floor. If the trading turret is to remain relevant it will come to mean many things to many people.

It is fairly certain that trading turrets will remain a specialized device designed to enable effortless communications. But as dominance in the financial industry continues to tilt toward electronic trading, the buy-side and complex trading strategies the evolution of trading devices and how they connect market participants must follow.

Thinking about the convergence of various types of communications further blurs the line on what a turret is or will be. The communications continuum may now include: instant messaging (IM), indications of interest (IOI), email, audio/video conferencing, plain old voice (POV?) originating from a land line or wireless device, texting, et al.

As we say at WCS, the “one size fits all” trading turret is no longer a sustainable product strategy for vendors. This is one reason why we introduced The Crossover Series of IP Trading Desktops in order to create a seamless communications capability among all employees involved in the trading process, whether on or off the trading floor.

We therefore have an already dynamic industry in a major business shift (sell-side to buy-side) and major technology shifts (electronification of trading and converged communications).

How will this all play out and what does it mean for those responsible for buying, supporting and using telecommunications in the capital markets?

Communications paradigms are no longer static
The revolution in consumer technologies has, by definition, changed how end users think about communicating. Traders expect to be able to communicate with colleagues, customers and counter-parties by any means, at anytime, from anywhere. The emphasis here is that the idea that you will give a trader a turret with a bunch of ring downs and speed dials and everyone goes on their merry way no longer applies.

Communications must be integrated
Not only will traders expect to be able to use the device of their choosing, they will expect it to be synchronized with all other devices and applications forming a single, virtual communications pod. This means that your vendors of choice better be offering open architectures and broad interoperability with other vendors in your ecosystem (unless it is Apple of course to whom the rules don’t really seem to apply).

Communications applications should be context-sensitive
Productivity in communications is driven by simplicity. The trader’s measure of satisfaction in communications is how quickly  it happens and how much useful data can I have at my fingertips while I am communicating? This will manifest itself in requests for integration with CRM tools, call histories and automated desktop search to name a few.

Communications infrastructure must be flexible and dynamic
Demands to be connected from home, from other offices and while traveling just as if they were at the trading desk are the order of the day. In order to meet these requests the communications systems must be offer the flexibility to connect securely over broadband, WAN and cellular and via a multitude of devices or applications.

At Wesley Clover we have embraced this vision since Day One. We recognized that a unified communications platform with powerful integration capabilities and an orientation toward interoperability with other leading technologies would be the first priority of our customers and collectively, we strive to make this our first priority everyday.

 

 

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Coming of Age: The Server-Based Turret System

Wednesday, 9. March 2011 16:52

Up until about a week ago, if you chanced to ask anyone at the world’s leading turret manufacturer about the efficacy of installing a server-based call control platform for traders we imagine the response would have been a curt “N-O!”

One-by-one the incumbents have moved in the server-based direction. In April of last year it was Orange Business Services, then British Telecom  announced the availability of a cloud-based platform, now, the lone holdout, IPC has announced that they will soon be in customer beta trials with their platform called Unigy. WCS, IP Trade (Belgium) and Speakerbus (United Kingdom) have all been on the server-based bandwagon for several years.

Anyone who has read “Crossing the Chasm” by Geoffrey Moore knows this is the normal course of things in technology. Incumbents are invested in maintaining the status quo. Along come the pesky disruptors evangelizing about a new and better (and often cheaper) way of doing things.

Most customers (all but the innovators and early adopter types) standby and watch the old guy and the new guy duke it out with bemused interest until (or if) the new approach gains a reasonable foothold. From there any number of things can happen from the incumbent buying the disruptor to the disruptor displacing the incumbent to the incumbent responding to the demand for innovation by finally developing their own version of the new platform.

This is what is playing out in the turret market as we speak. The incumbents are now “on board” that server-based systems are the way to go now that they have them on offer (or will shortly).

Server-based systems offer tremendous advantages to the customer in terms of reduced space and power footprint, flexible deployment options, scalability, software-based call control, resilience and so on and so forth. And let’s not forget it should have the potential to lower costs.

And it would seem for customers that all is now “okay” in the turret world. That they are “spoiled for choice” as it were. Six providers and six server-based systems. Different flavors of the same thing, almost. Just go ahead and pick one.

But all may not be as it seems.

Customers should be asking themselves (and their vendors) some questions.

For one, can one reasonably expect that the incumbents have re-calibrated their engineering and implementation/support teams to be able to deal with soft switch and IP networking technologies?

Second, will the incumbents, from a business model perspective, be capable (willing?) of passing on the economies they are realizing with introducing streamlined platforms. Customers should have a right to expect their acquisition and life cycle operating costs to go down in correlation with the reduction of  “big iron” to software-oriented platforms.

Third, while it is a relief that the end of the monolithic turret system era is on the horizon can you expect that these platforms will be “normalized” in the IT sense of the word? Specifically, take advantage of industry standard hardware, be switch-agnostic, run with reasonable power draws, provide scalability, resilience and extensibility and integration with enterprise applications, offer modern system management tools and all at justifiable price points?

Fourth, are these new server-based systems “trading floor tested?” The leap from a TDM to IP switching architecture, especially on the trading floor is considerable. At WCS, we have the luxury of marketing a server-based platform that has tens of thousands of nodes installed at enterprises of all types since 2001 and is in its’ 10th software release in partnership with a company, Mitel, that is allocating tens of millions of dollars annually into R&D.

Fifth, if you are a customer who is currently in the “buying mode” are you going to be a “guinea pig?” It takes time to train and more importantly, get the hands-on experience across-the-board. So if you are buying Orange’s  solution in Paris or IPC’s in New York (where their respective core engineering and technical teams are stationed) you can seek comfort in being near the epicenter of expertise and support. What if, though, you are in a far off locale and there are teething problems?

All in all, whichever path makes the most sense, customers are finally benefiting from a much-needed progression away of antiquated, proprietary switching platforms toward more scalable, open systems.

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Turrets in the Cloud

Tuesday, 8. February 2011 17:08

We came across a brief news item on Fierce Finance earlier today regarding the evolution of the traditional turret platform toward “the cloud” that left us something short of breathless.

WCS is happy to have company in the modern world, especially when we believe that that it helps to validate our value proposition while helping financial trading enterprises embrace efficient infrastructure that can unlock productivity and lower risk.

The part of the release that had the most impact was the quote from the manufacturer’s leadership team highlighting the drastic reduction in turret system control form factor and the benefits saying: “In the days of analog equipment, the largest trading floors could need up to 200 racks of equipment…”

We often say that traditional trading turret systems are at least twenty years behind enterprise IP communications platforms but this reference to analog technology platforms that were phased out in the mid-1980’s makes us think maybe twenty years was conservative?

We find more and more that customers are responding to our leadership in the advance along the communications technology curve that include: open operating systems (Linux), support of industry standard hardware chassis for hosting voice applications, software-based call control, application virtualization and SIP-based connectivity solutions.

Of course the rigors of the trading floor demand a measured approach to the adoption of new technologies. But as voice, video, CRM and collaboration technologies converge the risk of being marginalized by competitors who are deploying systems with advanced capabilities increases many fold.

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