Serving Complex Customers
During the last year Scila signed and successfully deployed several new customers in market segments that required more complex deployment projects in terms of integration and calibration. A typical example of these customers are major banks which inherently are complex organizations with a multi-layered IT infrastructure. Scila has the experience to cater for the diverse needs of such an organization.
What is it that makes the Scila solution so attractive for this segment? Based on Scila’s experience working with these customers the following are key components of a service offering that is attractive to these types of customers:
While the obvious base of an attractive offering must be a solid product in terms of performance as well as functionality, this is not enough. These types of customers very often require bespoke adaptations both with regard to internal data sources as well as logic. These adaptations need to be provided at a cost that is not only reasonable but also predictable and transparent for the customer. Also, the architecture of the system needs to cater for such adaptations without jeopardizing future upgrades of the platform or indeed just making them excessively expensive for the customer.
While most of Scila’s customers do not require any external help when deploying the system, these more complex customers often bring in external help for the implementation phase. There can be a multitude of reasons for this, wanting a second opinion on calibration, helping with the testing effort etc. The vendor needs to engage with whomever the customer has chosen as an external party. It is crucial for a successful deployment project that this cooperation not only on a superficial level but that the parties are willing to engage on a meaningful level and are able to dedicate the required resourcing in terms of staff.
There have been far too many recent cybersecurity related events for anyone to question the need for stringent security measures in all levels of the service offering from the application itself all through the layers of technology used to offer the end service. Having good security measures in place is not enough in itself, it also needs to be documented and a part of an organization that continuously strives to not only maintain but also improve security. From a practical perspective this can only be achieved under some sort of a formal IT-security framework like ISO27001 or SOC2.
Finally, deploying a system for these types of customers is really not just the beginning of a traditional customer – client relationship, rather it needs to be the start of a long-term partnership. The expected longevity of a system life cycle implies that a vendor must be chosen that can be relied upon to continue to develop the system, keeping it up to date to meet the challenges of a changing marketplace. Other aspects include the availability of training for onboarding new staff members, the opportunity to influence the technical/functional road map of the vendor and having direct access to support staff knowledgeable of the customer’s environment. A prerequisite of all of this is that the vendor can be expected to be there for a foreseeable future, this in turn requires the vendor having a business model that can support it without relying on external entities.
FIA Law and Compliance 2023 in Washington DC – 25-27 April 2023
This was Scila’s first time at this event, where far from being a formal legal event (which indeed were parts of it), it was clear that foremost on most people’s minds was the continuing challenge of meeting regulatory obligations, tracking them, and for the members of legal and compliance teams, a venue for a broad range of detailed and interesting discussions that would count towards their continuing education in this complex field.
Well done to FIA for a very well attended and well organised event!
For Scila a big takeaway was the continued need for better data quality in firms and preventative monitoring, to ensure safety in an environment where regulatory penalties continue to get bigger (as well as the volumes of transaction and market data!). Also ensuring timely and proper trade processing with adequate exception alerts were a key need to avoid added risks.
CCP risks as well were a topic – as were Cryptocurrencies and their regulation – with many agreeing to disagree – to be observed more closely in future as the regulators start to come together.
XLoD Global 2023 in New York – 16 May 2023
This was Scila’s first 1LoD event in the USA, and like the FIA L&C event a few weeks earlier, a valuable source of knowledge and ideas.
Prioritization of what to pursue was one – the 1st line of defense – discussion revolved around the challenge of what to catch, rank, examine and resolve or escalate. Prioritization of types of events and then the financial impact of these was also a thread that appeared a lot. Trading abuse and risk management are being considered as one rather than two discrete issues with several participants announcing the use of AI to assist with identification and classification – though these were challenged as methodologies would need to be explained – somewhat complex, it seems, and so not considered mainstream by far.
Multi market issues were also a topic with monitoring of both behaviour and risk exposure being needed to bridge apparently separate market activities that may be used to hide undesirable trading. This led to lively discussions on how different actors in the compliance, risk and business collaborated/co-ordinated their processes, whether they tested them as they evolved and retained test evidence as a benchmark, with continuous improvement, leading to better focus on potentially high impact issues that their functions depend on!
Surprisingly an area for improvement suggested was to allow the compliance, trading and risk control personnel define and implement monitoring rules – and reduce management’s role in building the procedural manuals!
Additionally a question that was raised numerous times was the role that regulators play as a punitive not educational participant – there is a need for regulators to assist with sharing experiences with market participants to help raise awareness and define standards, in what is a very collaborative area.
FIX 21st Asia Pacific Trading Summit 2023 Hong Kong – 11 May 2023
The 21st Asia Pacific Trading Summit 2023 held in Hong Kong was a hit as it is very well-received by FIX members such as those from exchanges, banks, brokers and prop groups, with delegates eager for insights over development in China and other regional markets. The event also dug deep into digital assets, given Hong Kong’s push to be a global hub for digital assets. There was also a lot of interest in monitoring trades over various financial instruments with the same underlying asset, given the increasing regulatory scrutiny over market abuse. Hong Kong is back.
Scila Presented during Horizon Software Event in Kuala Lumpur – 8 May 2023
Our second event with Horizon and this time it took us to Kuala Lumpur. Another presentation of Scila’s abilities to manage compliance and risk needs with Edric Lian and Phil Joslin presenting to KL’s Financial Service Industry. Banks and Brokers as well as Proprietary Trading Groups, many of whom trade commodity markets. A lovely community event ending again on the EQ’s roof top terrace with amazing views of KL.