Intelligent Design for Institutional Technology, Waters Technology

New technologies aiming to solve problems, rather than paper them over, are a refreshing change of pace.

I don’t think anyone can realistically say that we, and by ‘we’, I mean the world at large, are safely out of the woods yet when it comes to the financial crisis. From an industry perspective, diminished activity in equities is still hurting firms across the market spectrum, commission-only traders are struggling, and even healthy companies are reporting flat financials.

There’s no shortage of companies out there with The Next Big Thing, of course, even if the relatively sparse footfall and low stand count (plus the abridged size) of TradeTech Europe this year gave a stark reminder that most are having tough times. Compliance vendors are having, on the whole, a great time, though, and the apparent solution of throwing everything possible at spot FX, on the part of platform developers, must be paying dividends somewhere. Even if (mostly) everyone agrees that there are just too many platforms. By ‘everyone’, I mean everyone apart from those developing the platforms, of course.

Technology has always been designed to fill a need, ever since ancient man realized that it was a lot easier to kill a lot more people if the rock was sharp and had a handle. Over the past few years, though, it’s felt at times as if firms were fitting around technology, rather than the other way around. It’s alarming, not just because of the spend incurred as a result, but also because we’ll eventually end up being used as batteries, farmed in vast fields by uncaring metal overlords, waiting to be rescued by Keanu Reeves, if that pattern of thought is followed to its conclusion.

Recently, though, there have been a few technologies that have identified a problem with the market and wrapped themselves around it, though. Tradition’s ParFX (formerly TraFXpure), for instance, aims to mitigate economic advantage from advanced technology through its platform, while Squawker aims to solve the problem of performing block trades in an order book. Initiatives such as that between Liquidnet and SIX Swiss Exchange provide innovative ways to connect liquidity, and cross-platform surveillance tools allow for the search of voice records by keyword.

Essentially, it’s a good trend. It encourages the intelligent use of technology, rather than having it simply because it’s there, and it whittles the wheat from the chaff, so to speak. As always, I’m interested to hear from anyone doing anything exciting and new with technology in the capital markets space.