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Technology Spending Key to Fixed Income Market Share Growth – Traders 

Author: \ October 13, 2017 \ 4 Comments
Full Article: Traders Magazine

The top six U.S. government bond dealers have an aggregate annual technology budget of $26 billion. That astounding figure illustrates the extent to which technology prowess has become the key determinant of success or failure for banks competing in capital markets, reports Greenwich.

Comments
  • Slider
    SliderOctober 14, 2017"'Technology spend' would seem to cover a lot of things. If we look at from the FNL perspective on how FI technology is developing I think we can say that while progress has been made, most firms are still in shambles. It is different to build something that does something than to build something that people will use to do that something. The capital markets issues attempting to be addressed today are broad and varied, leading to huge internal spends and a plethora of…"
  • Cougar
    CougarOctober 14, 2017"That there is still a problem in fixed income that other asset classes overcame years or decades ago despite all the other asset class experts being parachuted in, as well as the significant spend, point to persisting problems - lack of information to deal (AKA 'price') decisively with confidence. These two issues are the inhibitors to market structure change: 1) the need to concentrate liquidity (rather than pretend to offer all-day liquidity) to allow traders to und…"
  • Jester
    JesterOctober 13, 2017"This article is an early Christmas gift to internal IT teams at banks, but it left me with a few questions. This "$26 billion" in proposed annual tech spending across the top six US government bond dealers, is that for just government bond trading or all products? I can't believe it is the former because there is just no way that government bond desks can sustain an average annual tech spend of ~$4 billion. Treasury market making never made that type of money and toda…"
  • Wolfman
    WolfmanOctober 13, 2017"$26,000,000,000.00 is a very big number, but the powers that be understand that this is a necessary spend. What this does, however, is identify a market for technology providers to attack. Talking on new IT development projects is a lengthy and expensive task and I think we'll see more and more third party solutions stepping into the fray. What's needed is a unique combination of technology knowledge and market knowledge which opens the door for start-ups, consultants…"
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4 Comments on "Technology Spending Key to Fixed Income Market Share Growth – Traders "

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Wolfman
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Wolfman
$26,000,000,000.00 is a very big number, but the powers that be understand that this is a necessary spend. What this does, however, is identify a market for technology providers to attack. Talking on new IT development projects is a lengthy and expensive task and I think we’ll see more and more third party solutions stepping into the fray. What’s needed is a unique combination of technology knowledge and market knowledge which opens the door for start-ups, consultants and large tech companies to prosper. I also think that this high concentration of technology in the hands of only a few large… Read more »
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10 months ago
Jester
Member
Jester
This article is an early Christmas gift to internal IT teams at banks, but it left me with a few questions. This “$26 billion” in proposed annual tech spending across the top six US government bond dealers, is that for just government bond trading or all products? I can’t believe it is the former because there is just no way that government bond desks can sustain an average annual tech spend of ~$4 billion. Treasury market making never made that type of money and today’s margins are razor thin. Also, this piece highlights how these big government bond dealers are… Read more »
Vote Up1Vote Down  Reply
10 months ago
Cougar
Member
Cougar
That there is still a problem in fixed income that other asset classes overcame years or decades ago despite all the other asset class experts being parachuted in, as well as the significant spend, point to persisting problems – lack of information to deal (AKA ‘price’) decisively with confidence. These two issues are the inhibitors to market structure change: 1) the need to concentrate liquidity (rather than pretend to offer all-day liquidity) to allow traders to understand the technicals of how the bonds trade; 2) materially improve the understanding of bond terms risk (AKA documentation). Traders should know what will… Read more »
Vote Up0Vote Down  Reply
10 months ago
Slider
Member
Slider
‘Technology spend’ would seem to cover a lot of things. If we look at from the FNL perspective on how FI technology is developing I think we can say that while progress has been made, most firms are still in shambles. It is different to build something that does something than to build something that people will use to do that something. The capital markets issues attempting to be addressed today are broad and varied, leading to huge internal spends and a plethora of start ups. Regardless of origin, successful projects/businesses frequently seem to have a strong investment of human… Read more »
Vote Up0Vote Down  Reply
10 months ago
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