Top of many financial services leaders’ agenda is regulatory pressure to safeguard operations. Several industry-specific regulations demand that companies state how they would deal with major IT outage and the level of risk they face.
The impetus for this comes not only from the threat of loss of business from a failure to trade, but also from increased intervention from regulators and industry bodies, encouraging appropriate business continuity plans in the event of extenuating circumstances. The UK’s Financial Services Authority has been vocal in advocating best practice in business continuity to ensure this is a priority for organisations, from chief officer level downwards.
Consequently, business continuity is currently a hot topic, as market participants are encouraged to plan around how they could continue trading. External threats such as avian flu, natural disasters, terrorist attacks – or even a more mundane but more likely plumbing failure causing a data centre flood – are forcing business continuity planning (BCP) up the corporate agenda.
In the event of disruption, the main priority of any trading organisation is to ensure traders are able to get back to work as quickly as possibly. To work effectively away from the trading floor, traders need more than just e-mail and teleconferences. They also need access to news, market data and all other communication channels and functionality that they are accustomed to on their turrets. In a world that decides success and failure in seconds, nothing can be compromised.
Although organisational infrastructures vary widely across the financial services industry, and organisations are at different implementation stages in their BCP strategies, the common trend throughout is to build in the capability within the production systems rather than relying on ‘bolted-on’ dedicated facilities. The bolted-on approach requires additional investment and management and is unlikely to provide the full service required by the traders when called upon. The superior built-in approach is possible with voice trading systems now capable of delivering full functionality across multiple sites.
Organisations are now establishing the beginnings of distributed architectures, enabling traditional lights-out disaster recovery facilities to be converted into active trading sites when needed. In the US, financial institutions have actively utilised this configuration, particularly since the terrorist attacks on September 11, 2001. As new product teams are formed and space constraints develop at a main site, firms are building new, fully functional sites to accommodate additional staff and also to serve as a back-up to the main site. The use of distributed architecture eliminates the need for a company to swallow the cost of maintaining a site that is rarely, if ever, used.
Distributed data centres
Organisations are now considering the implications and benefits of globally distributed data centres when drawing up their medium to long-term plans. For example, if New York were to have weather conditions severe enough to prevent traders from getting to their workstations, their London counterparts could log out of the London system and log into the New York system. Likewise, an Italian trader visiting London could log into his Italian system using a London system and carry on business as usual as if he were in Italy.
One of the best ways to increase flexibility is to implement technology that enables virtual trading. Productivity is improved as traders are capable of working away from the trading floor by accessing information globally from either the Web, IP phones, or wireless devices such as a phone or Blackberry.
Virtual trading technology that incorporates turret-like functionality on other devices can also provide cost-effective, on-site access for support staff that may not justify the expense of a full turret, but who still need to share calls with the trading environment. This can include the back office, research and other support functionality. Sharing trader voice access in this way can improve communications across all team members on the STP chain.
Here comes the VTO
Increasing numbers of companies are looking to make the transition to the virtual trading organisation (VTO) – moving from site-centric, proprietary voice solutions to open, standards-based, distributed solutions with converged voice, video and data functionality, applications and appliances. For example, Calamos Investments, one of North America’s fastest growing asset managers, has recently adopted BT’s technology to enable virtual trading. In addition to introducing IP-enabled multi-media trading devices on the trading floor that can integrate voice, video, instant messaging and e-mail to suit business demands, it has also rolled out a browser-based turret with the same familiar interface.
Trading organisations considering remote access technologies are demanding certain features to ensure it fits with their established best practices and IT infrastructure. For example, any remote device being used to access private wires and direct inward dialling (DID) has to connect to the voice recording facility for compliance purposes.
With such technology being increasingly used by innovative organisations, the adoption of the virtual trading vision is the prime topic of conversation for financial organisations as part of their discussions around business continuity planning. Scotia Capital, a Canadian-based provider of global investment banking and capital markets services, is another example of an organisation that is ahead of the curve, deploying BT’s remote virtual trading technology specifically as a direct response to the Sars outbreak that hit Toronto in 2003. This has allowed 100 traders at Scotia Capital to work from home or any other remote location with internet access when necessary.
Devising business continuity plans that address all these threats is challenging for trading organisations. One size does not fit all and, increasingly, offerings comprise a hybrid approach where firms can migrate gradually, and interoperate with their existing PBX and time division multiplexing (TDM) voice networks, while ensuring they are ready to benefit from a fully converged IP environment when appropriate to them. Calamos and Scotia Capital have shown that with a virtual trading infrastructure, these challenges can be more easily overcome.
Organisations wanting to take further advantage of this increased flexibility and operational resilience are moving towards ‘thin building’ architectures in which the central equipment is removed from the main building and effectively locked down in a data centre. In this configuration, all of an organisation’s voice and data connectivity is delivered to the data centre, leaving only desktop equipment at the main site. Users can work from the main site, a disaster recovery site or another remote location by routing their desktop connection to the data centre where each user’s configurations and preferences are stored.
Achieving this architecture might seem a daunting prospect for many organisations, but as long as any infrastructure changes are aligned with trends such as voice and data convergence on IP networks, the organisation can progress at its own pace.
Phased approach
Most financial institutions are taking a phased approach to the globally distributed trading organisation. Rather than removing legacy networks, firms are using technology that supports both TDM and IP networks simultaneously, allowing them to add new devices alongside previous generations. The ability to interoperate means firms can use both IP and TDM technology, giving them the ability to switch networks in the rare event of a failure.
Mission-critical trader voice systems have traditionally been supported ‘end to end’ by the supplier. Integration of voice over the data network brings the benefits of common security and provisioning, but relies on the resilience of the network for end-to-end delivery. The trader voice supplier can no longer assume end-to-end responsibility. Instead, the supplier must work closely with the internal network support team to guarantee reliability, starting with collaboration at the network planning stage and extending through to operational support. For this new approach, a partner that understands the full impact of IP – and has a track record of designing, implementing and supporting comprehensive IP networks supporting voice and data – is needed. They should also be able to help the migration with an approach that mitigates the risks associated with change.
Taking this process to its logical conclusion, a virtual trading community where trading organisations fully utilise the flexibility of IP technology will emerge. Regarding voice recording, this means any device connected to the platform can be recorded and saved anywhere on the network, giving greater resilience to business continuity than traditional voice recording systems, which rely on hardware devices and dedicated storage.
This environment will provide new collaborative opportunities, increased trading speed and effectiveness, as well as business continuity models that replicate the main trading floor. While there are concerns over the ability of the technology to address issues such as reliability, voice quality and data integrity, most organisations will embrace it as the industry standard of the future, and reap the ensuing rewards.
Tim Furmidge is head of strategy and business development, BT Trading Systems.
