June Trading Floor Technology Update

coronavirus superimposed on Canary Wharf, London

Senior trading floor technology managers are getting used to the challenges of COVID-19. Strategic concerns are starting to outweigh the day to day detail of supporting trading in lockdown. Outside of technology circles, unrealistic expectations remain that “technology can deliver compliance” by itself, even in these new circumstances. There is also a complex business continuity environment due to dependency on new bandwidth-hungry apps, and shared networks provided by public ISPs. While many workers will remain remote for some time, with some retail banking divisions already pushing back to March 2021, more traders are expected to return to office locations in June. This will require a range of risk reduction measures, some of which may become permanent.

Trader Voice

As markets tick upwards on news of the proposed relaxation of restrictions, the reality is that the corporate office, and even the trading floor, may never be the same again. The days of Trader Voice as a hardware offering were numbered before COVID-19. It is an open secret that most traders only use a fraction of the capacity a trading turret (dealerboard) provides. With an enforced reduction in capacity, most traders are relatively satisfied with their soft-client turrets and even subscription voice apps for some lighter use cases. This comes despite the limitations of only having single voice channels. While we maintain that some users require the full functionality of a turret, it seems likely that there will be fewer purchased (or leased) as the focus moves to operational necessity.

Remote Continuity

Remote working means that business continuity is starting from a lower baseline. A concern for technology directors is that traders are working over public ISPs that can’t offer the “five nines” dependability they are used to. They identify the UK as a notably problematic ISP market. Dedicated Internet access [DIA] contracts provide office locations with uncontested bandwidth and access to high speed backbone networks. Clients set SLAs for latency, up-time, packet loss and jitter. While VPNs can effectively extend a company’s network to the remote user, and Cloud applications guarantee service levels, remote access still requires the use of congested public backbone networks, contested demand at the local hub (and in the home) and higher risk of downtime. DIA to the Home would be prohibitively expensive so it is likely that office space will need to be found for trading staff. As discussed in a recent post, this could be on the main trading floor, at DR sites, in existing retail locations or in hired office space. If there is any delay in finding office space then some banks will provide stipends to enable traders to upgrade their home networks and to install back up services for redundancy.

Remote Surveillance

The most pressing issue with remote trading is how to manage compliance. The feeling is that a test case will arise soon when a bank is found to be non-compliant or not to have made sufficient effort to remediate its regulatory response. Technology is unlikely to provide a solution to the compliance challenge because the people who choose to manipulate markets do so knowingly. They draw up plans offline and, if verbal communication is required on the day, it isn’t made using a phrase that anybody is looking for. So, even if every channel were being surveilled and analyzed in real-time, there would be no tangible outcome.

JP Reis is involved with a solution that identifies anomalous patterns in trade data and takes the time stamp to search for relevant communications leading up to the event. While this solution works, it still requires relevant channels to be surveilled. A potential solution for remote working would be to monitor all staff using video so at least there would be a record of something, including an absence, at the relevant times. Once again this presents cost and complexity issues including the workarounds that would be required for privacy laws. The more workable solution, where restrictions allow it, will be to get staff back onto a trading floor or into premises where a requisite level of governance can be applied.

Back to the Office

Opening an office is one thing but people need to be able to access it. The challenge of the commute is likely to rule some people out until restrictions are further lifted and confidence has grown. In large buildings, people need to be able to reach their floors and work safely when they get there. They also need to be able to escape in an emergency. In the short term the focus will be on Perspex sneeze guards, elevator queuing systems, and floor markings that help maintain distancing. Maximum occupancy will be reduced.

In the medium term, heat sensors and other accelerated checks will identify disease at building entrances and facial recognition systems will help to maintain security. Nano-technology will inhibit bacteria on touchable surfaces and mobile phones will integrate with business intelligence systems to provide touchless access to facilities, resources, and services. Some people will see increased monitoring as a dystopian step but these measures can help to transform offices into quarantined spaces where community and culture thrive safely in a more Utopian vision of the workspace while considerable numbers remain remote most of the time. For the traders, surveillance has always come with the territory.

Conclusion

The short term fixes and workarounds of the last three months will start to prepare the ground for future policy. IT leaders have been given an insight into identifying the functionality that is operationally necessary and the bandwidth required to support it. It is likely that regulations will return closer to pre-pandemic levels soon and that will drive a new learning curve as well as a return to corporate premises. The next big voyage of discovery will focus on how trading floors and wider office space will look in future and who will be permitted, prepared or able to attend them.