This article, which originally appeared in the Global Trading Journal, explores how the trading desk and the technologies that surround it have evolved given the new norm of prolonged business continuity measures brought about by COVID-19. It was jointly written by Ferris Kwan, Senior Vice President and Head of Trading, Securities Financing & Treasury Technology at GIC, and Janette Shim, Regional Director, Sales & Relationship Management, Trading Solutions at FactSet.
In 2020, in the span of a few short months, the COVID-19 pandemic has brought about radical changes in the ways we live and work, and the business of Institutional Asset Management has had to pivot quickly to adapt to this new normal. Buy-side trading desks are trading a higher volume of orders that need to be handled with greater care and discretion than ever, given high market volatility, amidst a rapidly changing environment and heightened uncertainty.
In Asia, and specifically Singapore, the first wave of COVID-19 occurred in early February. In response, some organizations went into a partial Business Continuity Planning (BCP) mode by splitting teams to operate in different sites, or by having a portion of the workforce work from home (WFH). While it is likely that few Business Continuity Plans have been crafted with a once-in-a-century global pandemic in mind — having a well-tested BCP process is essential for an organization to ride through this difficult period. This quickly escalating threat has forced much of the world into potentially months of “Working from Home” as countries around the globe drastically limit the mobility of their workforces.
This has in turn forced asset managers to enact full-blown BCP measures to enable entire organizations to work from home.
Switching into full bcp mode
However, executing a firm’s mission-critical, real-time trading operations while under full BCP, is extremely challenging. It takes teams across Business, IT, and Risk Management functions to come together to analyse contingency requirements, implement infrastructure upgrades (such as VPNs, network bandwidth, etc.) and making unplanned purchases of IT equipment at short notice to provide for a surge in remote access. Policies have to be reviewed to allow sensitive functions to be carried out from outside office premises. All these are needed to allow entire operations to be run reliably and securely from employees’ homes.
Prolonged WFH arrangements and choppy market conditions necessitate a firm to review and change its firewall configurations and entitlements to enable trading applications and their full suite of features, to be made available to teams trading from home or at the office. As such, simplicity in the integration layers between platforms is very important to ensure entire operations can failover from production to disaster-recovery environments quickly.
Ferris Kwan, Senior Vice President and Head of Trading, Securities Financing & Treasury Technology at GIC, explains “Having a primary EMS (Execution Management System) which is able to deal in multiple asset classes definitely enables a buy-side firm to switch to WFH mode with relatively little hassle, compared to if one were to have multiple applications for different products and multiple pipes to switch over. We also need experts who understand our business and workflows well, and thus are better able to cater to our trading technology needs. This will make the BCP mode transition much easier.”
Janette Shim, Regional Director, Sales & Relationship Management, Trading Solutions at FactSet, adds “As a service provider in trading technology and solutions, the stability of Enterprise EMS is of utmost importance to our clients, who all need to make BCP transitions in result of the COVID-19 crisis. For example, in the initial stages of this transition, we incorporated system change freezes voluntarily to maintain our systems’ steady-state, providing maximum reliability to withstand the volatile markets and trading volume spikes globally – a situation that persisted for weeks,” explains Shim.
“It is paramount for EMS stability, that service providers have the appropriate internal tools in place, accessible on BCP mode, to monitor system stability and performance closely, and provide comprehensive support, around the clock,” Shim continued.
For traders, the ability to process and render data, both structured and unstructured, and the connectivity of a trading platform to traditional exchanges and alternative liquidity venues is extremely important, particularly during prolonged periods of high market volatility. This is driven by the following considerations: