Of all the vendors exhibiting at SIBOS this year, none has a more exciting future than Wall Street Systems. This company has just been totally reinvigorated with one of the most powerful management teams in the business, backed by Warburg Pincus, the global private equity firm and an experienced investor in financial technology. The team has recently been created via the merger of Trema and Wall Street Systems and now looks like they have the management X factor to fulfil the tremendous potential already established at Wall Street Systems.

 

Combining Trema and Wall Street Systems technology and businesses under a strong management structure looks like perfect timing. Currently European Treasury and Capital Markets are colliding with political, regulatory and business changes brought about by SEPA and MiFID.

 

Many financial services firms are still struggling to come to terms with the stated political ambition from Brussels of a single European market. The need for technology solutions to enable the European markets to move into the new order is going to be vitally important, but in terms of systems capability, many are already in place. Much of the functionality required by financial services that will get them to the ‘Promised Land’ has long been available. The financial services industry has been unable to throw off its burden of legacy systems and has tended to look for quick cheap fixes, when the need arises. However, to achieve the benefits of the new European market, a greater investment in systems will be required.

 

For many financial services companies, the historical restructuring of the markets, which is being fostered by political wills, is too far away from their ability to plan strategically. It has always been evident in many financial services firms that when confronted with a future planning challenge, which requires both business and technology changes, the normal course of action has been to rebut, delay or form any number of committees. The resulting technology investment is then normally put in the pending tray, possibly via the introduction of consultants. The results are standardised with either no decision, or a strong wall of resistance to any attempt to change, let alone implementation!

 

This is historically a typical market response to industry changes of a regulatory nature and can currently be found in MiFID and SEPA. With MiFID for sure we can find most financial services firms standing confused or at best sceptical and entering into debates, because of the lack of industry leadership. The result is an industry clogged up with financial services organisations all wanting to be told what to do, a bit like a child in the middle of a busy road waiting to be led to safety by a friendly policeman. Not sure the FSA and the other regulators are that safety conscious!

 

With industry regulatory changes that will re-landscape the European financial markets it is up to the boardroom, within financial services firms, to understand the implications and plan their future business strategy. Consultants should not be a part of this business process, although they could add value, once decisions are made.

 

The political and regulatory changes upon us will open up new business opportunities for financial services companies, but only if they have the knowledge and courage to take the first step into the unknown. A risk that in the past they have been unwilling to take, but with so much uncertainty about the future market picture, the rewards will be for those that take a calculated risk, in establishing a business strategy. Indeed the greater risk will be to sit on the fence and do nothing.

 

There is no doubt that the European markets are on course for massive change in their structures, which may in fact only be slightly delayed, when measured against the historical times we are in, with more changes happening now than in the past 300 years. MiFID and SEPA are both suffering from industry delaying tactics, where vested interests at both a personal and corporate level are producing obstacles to the inevitable.

 

When politics and business are forced into becoming allied, the markets often try to delay the implementation dates, or water down regulatory change to enable a slower evolution in their own businesses for compliance and this can be seen with MiFID. It has been a historical industry reaction to forced change and can be seen in many changes since the mid eighties where deregulation, which was known as ‘Big Bang’ took almost a decade to become a reality. This attitude will not be found within the software vendor community where change and developed solutions are a way of life and are welcomed.

 

Software firms have already been developing their own strategies and technical solutions and are well ahead of the game and prepared for implementation. So it is up to Companies to plan and present their technology requirements, for the dawning of the new European markets and with software firms like Wall Street Systems ready to get down to the business at hand, it is clear where the responsibility now lies.

 

The new Wall Street Systems has a compelling position in the market, to clean up when the flood gates open and firms begin their systems development implementations in earnest.

 

The forthcoming regulations are ultimately unstoppable. Politics and business do not make good bedfellows, but for the supplier, this is looking like the beginning of a golden age! Wall Street Systems is perfectly placed to be big winners in the next 5 years.

 

It is extremely difficult for people in the financial services industry to try and plan for the short to medium term future, whilst under the pressure of running the business today. Individuals within management need to show genuine, wide, up-to-date industry knowledge that enables the successful marrying of business operations and technology. It’s not worth taking the narrow view of the business, when the industry changes are wholesale and cover the vertical structures of the industry as well as changing client demands and compliance to new regulations!

 

Just look at the list of business types below that are all affected by the changes in the market brought by MiFID, SEPA, the Transparency Directive, the Market Abuse Directive and the Clearing and Settlement Directive.

 

Ø                    Issuers

Ø                    Stock Exchanges

Ø                    Clearing Houses

Ø                    CSD

Ø                    Wholesale Investment Banks

Ø                    Retail Banking

Ø                    Data Vendors

Ø                    Regulators

Ø                     

It is a challenge to foresee what the market will look like in ten years time and how it might affect your firm.

 

All these changes are brought about because of political ambitions that transcend and totally trump any business objective set in the last few years. The smart financial services company will not waste time trying to delay the inevitable, but will plan how they can take advantage of the enormous opportunity that is waiting to be captured. History says that such proactive planning is likely to be a dream, as the industry, as whole, is a reactive one. However, when a software vendor like Wall Street Systems demonstrates such imagination in its own planning, it deserves to receive some accolades and they are showing the way to the financial services firms. There is no doubt the rewards will be heading towards Wall Street Systems as a result.

 

The product portfolios within Wall Street Systems have an industry vertical appeal; from the Treasury departments at the issuers through to both retail and wholesale market financial services firms. Very few vendors have this vertical line of industry technology products, which are so perfectly situated to take advantage of the historical changes that the European markets are undergoing.

 

The big plus for Wall Street Systems, is that its management are well aware of the business opportunity in their grasp and have a product portfolio capable of taking advantage of the industry opportunities that appear to be within its grasp. The smart chaps at Warburg Pincus deserve rare credit for backing a company that has a ‘win-win’ look about it.       

 

By Gary Wright