Member Article

Adjusting to a new paradigm

By David Brown, Chief Operating Officer at IPC

The sudden onset of the COVID-19 outbreak has rapidly led to a “new paradigm” for individuals, communities, and businesses. In the wake of these shocking and unprecedented developments, major trading locations were forced to quickly transition and adapt to the logistical challenges of supporting mass remote working, in accordance with the lockdown laws introduced by governments around the world.

Traders, who are typically accustomed to conducting all trading activity on secure trading floors and under strictly controlled, highly monitored conditions, now find themselves dispersed across multiple locations. This opens up several new operational, regulatory and compliance risks, and creates an increasingly complex and dynamic environment for compliance departments to oversee (remotely of course!).

With the evolution, impact and outcomes of the ongoing pandemic proving difficult to predict, how can financial markets participants ensure that they maintain their resilience in the face of volatility?

Threats to security and compliance

Even before the coronavirus made it truly necessary, there has been an increasing trend in many industries towards offering greater remote and home working flexibility. The same was not true for the financial markets. With far higher regulatory and security hurdles to jump, it is understandable that financial markets participants have been slow to adopt such flexible working practices.

For firms that have had to rapidly transition their regulated trading activity and systems access arrangements to support remote working, there are now an array of new data security risks to address. Not only must financial institutions consider these security implications, they must also ensure that their traders – now working from their living rooms and spare bedrooms - are able to demonstrate compliance with strict regulatory standards.

COVID-19 has introduced much uncertainty to the world – not only politically and economically, but also in terms of our social interactions and the way in which we live and work. Given the timescales associated with developing effective treatments and vaccinations, it is almost certain that the current restrictions will become, to some degree, the new normal for some time. In order for firms to not only survive but also thrive, adaptation to this new paradigm is key.

Adjusting to a new paradigm

These extraordinary levels of uncertainty are currently wreaking havoc on the FICC markets, where we continue to witness unprecedented volatility in Treasury yields. In the face of wild fluctuations in pricing, widening spreads and uncertainty as to where liquidity lies, financial institutions must continue to service clients, discover prices, source liquidity, and manage risk.

The road ahead will be a difficult and often rocky one for those firms that are highly dependent on a small group of venues and counterparties for market access. However, the current market conditions create a clear opportunity for large networked communities to play their part in creating resilience and distinguishing themselves from the competition.

Large, diverse communities offer financial market participants connectivity to a ready made global financial ecosystem. This ecosystem is one that comprises a wide variety of counterparties for price discovery, liquidity sourcing and trade execution – for example, broker- dealers, exchanges, dark pools, asset managers, hedge funds, institutional investors and market data providers. In other words, the network gives firms access to the information they require in order to find liquidity, and the means to be able to access it.

There is quite clearly enormous value to be gained from networks that are designed to be secure, resilient, and to support their members’ compliance requirements. Firms that planned ahead and were prepared for a digitally connected, decentralised world have the advantage now, and are ideally positioned not only to maintain business continuity but also to thrive during this time of crisis.

How IPC is empowering the markets

During stressed market conditions, traders need to have access to the right network and counterparties to find liquidity. We believe, large networked communities create resilience and successful community networks must offer its participants connectivity to an already built, diverse and global financial ecosystem.

IPC offers one of the largest and most dynamic ecosystems in the global capital markets with a community of 110,000+ users from over 6,600 capital market participants around the globe, across 750 cities in over 60 countries.

IPC also has a number of performance-engineered solutions that enable financial institutions to maintain business continuity, fully empowering traders to work remotely in a secure and compliant manner during these challenging times. They include:

• Disaster Recovery as a Service (DRaaS): A SaaS service recently launched with our strategic partner, Cloud9 Technologies, that allows traders to have ubiquitous access to a custom-designed virtual trading desk from any global location during an emergency.
• IQ/MAX Omni: A remote soft turret solution that provides access to a client’s IPC Unigy system through an intuitive interface.
• EVS as a Service: A SIP-based cloud service that enables firms to have multiple alternative trading locations while maintaining continuity across their private wire ecosystem.
• Remote Devices: Enabling a firm’s traders to extend their best-of-breed IPC physical devices to any remote location via the firm’s internal VPN capabilities.

The pandemic has touched every one of us: our families, our businesses, our communities, and our very way of life. I am proud of the extraordinary efforts from the entire IPC team in supporting our customers and delivering the highest levels of performance, thereby ensuring that the financial markets function smoothly.

This was posted in Bdaily's Members' News section by S White .