Hedge Funds and Phone Systems

Thursday, 23. June 2011 11:17 | Author:

Computer-driven trading  has done little to diminish the importance of telecommunications in conducting business at hedge funds. While IM has replaced or augmented voice in the early stage of the trading process it is still good to talk and hedge fund traders have been weaned on trading turrets and digital trunking that are the apogee of reliability, quality and ease of use.

The difference is that bulge bracket firms from whence these traders came, have the scale, staff and budgets to manage complex telecommunications infrastructure while starting small and running lean is de rigeur at most hedge funds.

Often this means a choice between allocating a disproportionate share of resources to replicating the systems they used at large firms or making compromises that may:

  • impede trader productivity
  • lower system quality
  • decrease flexibility as the firm grows
  • increase overall life-cycle costs

Might there be a “third way” in essence having your cake and eating it too? Let’s look at a few aspects of the telecomms conundrum.

Day One and the Future

A mistake we see almost every week is customers being shortsighted in the procurement process. The sheer strain of getting a new venture  up and running is enormous and a lot of decisions must be made quickly and with very little sense of how things are going to play out.

Basics include asking potential providers to answer these questions :

  • Does your firm deal with trading firms regularly?
  • How does your system handle DR?
  • How much does it cost to add users?
  • How do you add remote users or branch offices?
  • Does your system offer trading turret integration (PBX)?
  • Can your system handle ringdown circuits or audio feeds or hoots?
  • Can multiple users jump-in on a line?
  • How many phones can a given line appear on?
  • Can your system be hosted in a remote data center?
  • Can your system support voice recording?


T1 PRI and Ringdowns still rule the day in trader voice. What these connections lack in flexibility and resilience they make up for in assuring quality and consistency.They fall within acceptable price-for-performance ratios and most carriers offer various business continuity solutions that will reroute calls in situations when there is an outage. SIP Trunking can be substituted (or deployed in addition to) for T1 PRI. SIP offers many advantages including:

  • can be purchased in individual trunk increments (instead of blocks of 24 like a PRI)
  • enable dynamic rerouting in case of a carrier outage or cable cut
  • allow remote workers to work off of the same phone system and have local phone numbers

Hosted vs. Premise-Based

Tempting as it may be to go with a hosted VoIP telephone system there are certain circumstances under which you should resist; while these services offer convenience and flexibility they are not designed for the typical workflow of financial trading enterprises. For example they:

  • usually do not support ringdown connections
  • do not offer trading turret or hoot n holler devices
  • cannot support multiple people barging-in on lines
  • cannot support multiple appearances of lines
  • offer tedious, menu-driven phones with few buttons
  • can have inconsistent call quality

The good news about most premise-based VoIP systems is that they can be hosted in a remote data center and offer mobility applications. This reduces the likelihood that a building issue will affect your phone system and enables you to support remote users in branches or at home on the same system.

To Turret or Not to Turret

Buy-side trading floor denizens can be a different animal from their sell-side counterparts. To begin with their work is is often managing a portfolio or research-oriented which may not be nearly as phone-intensive as say that of an interdealer broker.

That said, trading floor staff at a hedge fund frequently make use of common trading turret features such as ringdowns,  multi-party ad hoc conferencing and multiple pages of direct  speed dial buttons. These capabilities are not readily imitated by a hosted VoIP or PBX-type telephone system and it can cost extraordinary sums to purchase a traditional turret system, especially for a handful of users.

WCS incorporates the entire spectrum of telecommunications for a trading firm into a single, scalable platform. Turrets can be deployed on “Day One” or added later if needed. We also offer a variety of IP trading desktops that suit different types of users at different price points and they all contain the core capabilities of a trading turret as well those of a regular phone.

Its Not Just the Phones

Financial trading is ferociously competitive and so problems with IT systems require immediate support. Ensure that the companies that supply you with phones (and other IT systems) deal with your type of business regularly, are able to respond quickly and are staffed with people who are familiar with the trading environment.

Your IT Partner

Voice solutions are not usually the bread and butter for most hedge fund solution providers. The tendency, especially if they are a cloud-based business model, is to partner with a hosted VoIP provider. This can seem like the best way to go but remember that hosted VoIP providers do not cater to financial trading and often lack the features you may require. Several are aligned with a particular PBX manufacturer (Avaya and Cisco come to mind), and rightly, have invested in building skill sets and service capabilities around these platforms. In any case, these providers can have either a bias or an agenda so it pays to do your own homework if the phone system is a key component of your business.

In Summary

A lot of the decision on the most suitable phone solution depends on the various activities your firm will be involved in. The flexibility and resilience available with IP technologies can  mitigate operational risk and make your staff more productive. But all of the technology in the world will not make up for the purchase of a system not designed for a trading environment.

Category:Buying A New System, Uncategorized | Comments Off on Hedge Funds and Phone Systems

Common Sense Advice for High Availability IP Trading Communications

Thursday, 9. June 2011 13:36 | Author:

Time for a brief review for those trading floor technologists who may be preparing for a migration from TDM to IP trading communications platforms.

As more and more trading floors begin to deploy Internet Protocol (IP) based trading communications infrastructure and reap the rewards that these  systems and networks offer, it is an opportune time to talk about the major differences between TDM and IP platforms and how to ensure that your traders enjoy the same reliability and performance they have been accustomed to.

Out of the Voice Silo | TDM-based turret systems exist in their own world. This “quarantine” of static trader voice systems is inefficient, inconvenient and expensive but has an upside. It can contribute to maintaining a high level of reliability, quality and consistency of the user experience because voice services cannot be compromised “competing” with other applications on a converged network. In the brave, new world of IP, trader voice systems are almost inevitably going to be deployed on a converged network.

Key | Creating a redundant, resilient LAN infrastructure with logical separation using a virtual local area network vLAN and Quality of Service (QoS) is standard procedure and helps to assure that the latency-sensitive voice application maintains priority on the network and that network availability meets trading floor standards.

Resilient System Control | In TDM world only the largest financial trading enterprises have the money, staff and infrastructure to deploy resilient trading communications systems. It is safe to say that beyond say, a UPS, a majority of firms deployed the “strategy of hope” when it came to business continuity for trading turret systems. IP technology has reduced the “big iron” to standard servers and inherent networking capability enables these servers to be not only installed in a data center but networked. This has eliminated the three major hurdles to a truly resilient trading communications infrastructure.

IP networks (shared) and technologies offer tremendous benefits but do not have the same characteristics of TDM-based (dedicated) environments. Availability, resilience and flexibility all have the potential to actually increase in an IP world, but the design of the network and platforms is critical to making this happen.

Key | Create resilient, high-availability trading communications environments by taking advantage of the native networking and failover capabilities of IP platforms and their ability to be deployed in a distributed topology.

Alternative/Resilient Network Connectivity| Now that you have a bullet-proof LAN and resilient trading communications platform don’t get tripped up on the third pillar of a bullet-proof infrastructure. The same lessons apply to PSTN and ring down connectivity. Most carriers offer  dynamic rerouting services for T1 PRI as well as fault-tolerant SIP Trunking and ringdown services. These services enable vital trading connections to be rerouted to a back-up platform or at the very least forwarded to mobile devices in the event of an outage or dreaded cable cut. Another basic approach is to have some POTS lines and single-line phones to receive incoming calls to the main number and make critical outgoing calls in the event of  PRI or SIP trunks become unavailable.

Key | Work with carriers that have a demonstrated track record and domain expertise in providing highly available network services backed-up with premium service level agreements for real-time trading environments.

Summary | IP-based technologies are now the standard offering for voice trading communications suppliers. All research & development resources are being spent in this area and with each passing day, customers can expect TDM-based platform support will be phased out. By following some simple guidelines, IP trading communications platforms should match or exceed the high availability and performance standards of TDM-based solutions and at much lower life-cycle costs.

Category:Buying A New System, Disaster Recovery, The Turret Market | Comments Off on Common Sense Advice for High Availability IP Trading Communications

How Will My Traders Deal with a New Phone?

Tuesday, 10. May 2011 14:34 | Author:

Most of us are only too aware that stress is a fact of life for those who work on trading floors.

A big part of the job in selecting and supporting the technology that traders depend on to perform at their best is to make sure it maximizes productivity by streamlining their workflow. Naturally, this can create anxiety for decision-makers in the selection and implementation process and incumbent vendors often try to amplify this fear, uncertainty and doubt.

Rarely does a day go by when we are not asked a question about how traders handle the change from an old to new system.  Knowing that humans can be creatures of habit makes these legitimate concerns. The endowment effect, also known as the status quo bias, can make change a tricky thing to overcome.

The usual concerns (and fears) pour out:

  • How will they adapt to a new interface?
  • Are all of the features the same?
  • What if the buttons are in a different place?
  • What is new and different?
  • What will they be losing?

I am happy to report that we have been witness to several thousand instances of change for telephone and trading turret end users since 2007 and to date we have not “lost” anyone. Further, that if asked,  decision-makers would say that they were pleasantly surprised by how well their end users adapted to the new system so quickly.

This is not to say that this, or any, transition is not without challenges.  But with a solid plan, preparation and end user cooperation (in training sessions and review of orientation materials) the switch can be quite seamless.

The first thing working in favor of the change with a telephone or trading turret is that, chances are, the end user depends on the device for a reasonably finite set of repetitive tasks: making a call, receiving a call, transmitting on a hoot, transfer/conferencing/hold/release and perhaps, programming a speed dial or swapping lines around.

Another factor in creating a tailwind for successful transition is the high level of standardization in look, feel and behavior of most telephone and trading turret devices combined with intuitive programming menus available to users and administrators that make it easy to customize a user profile.

The third positive is that while most people do not embrace change our brains are designed to excel at adapting to new circumstances.

At WCS, we support our customers and their end users throughout the process. Our project management teams deploy a practical approach to ensuring that disruption to end users is minimized. This includes:

  • helping to develop an inventory of current lines/speed dials and end user profiles which are programmed into the new system
  • offering pre-cutover training sessions to end users and system administrators to ensure familiarity with the new system
  • producing custom user guides highlighting the most popular features
  • being available at the customer site on the days leading up to and directly after the new system cutover

We will save the subject of how much end users enjoy the new features and capabilities that come with a true IP communications system for another day and we will leave with two keeper quotes from recent converts to the WCS system.

“This system blows away our old turret system and for a fraction of the cost.”

– Chief Operating Officer at a Newly Formed Hedge Fund

“I am just shocked that we have not had a single complaint from the users since we went live.”

– Telecommunications Manager for a Broker-dealer with 100+ traders coming off of a legacy trading turret system that had been in place for the past 13 years



Category:Buying A New System | Comments Off on How Will My Traders Deal with a New Phone?