Strong growth environment for vendors with the right platforms as brokers consider new suppliers and sell-side ends vendor reduction programmes, Acuiti study finds.
London — 4 December
Over half of derivatives brokers are considering a new front-office software supplier as firms invest to stay competitive, an extensive study into front-office buying trends and customer satisfaction levels of the major providers has found.
The Acuiti Front-Office Software Review, the largest study of its kind into derivatives trading systems, found a healthy overall environment for technology vendors as just 5% of clients plan to reduce the number of systems they used over the next two years.
There is also a strong environment for client acquisition as almost a third of respondents said they were considering a new vendor over the next two years. Brokers were the most likely to be considering a new vendor (55%) followed by non-bank FCMs (38%) and proprietary trading groups (35%).
This follows a period of aggressive cost cutting by derivatives market participants that has resulted in a reduction of the number of platforms firms deploy – a trend particularly notable among banks, 39% of which had cut the number of vendors over the past three years, the Acuiti study found.
“There is huge opportunity for vendors to grow market share in the derivatives market as the latest phase of cost reduction has reached a natural conclusion and a significant proportion of firms are considering new providers,” said Will Mitting, founder and managing director of Acuiti.
“We found that, while many of the major incumbents are set to grow both organically and through new client acquisition, clients are also looking at newer providers with Vela in particular set for growth according to our findings.”
The Acuiti Front-Office Software Review analyses clients’ priorities when selecting a new provider and customer satisfaction levels across 17 metrics for six of the major providers in the market today.
Consolidation among software vendors and the emergence of new delivery models for technology have dramatically changed the landscape for the provision of front-office systems to the derivatives market.
The study found that, while overall the senior executives that responded to the Acuiti survey were satisfied both with the choice in the market and generally neutral on the recent consolidation, there were significant differences in views depending on which vendor firms used.
We also found that while risk management functionality was a top 3 consideration for most of the respondents when choosing a new system, users tended to rate their providers poorly in this metric.
The Acuiti Front-Office Software Review is based on over 200 independent reviews of six major providers of front-office technology to the derivatives market. Acuiti sourced all respondents to the survey.
The six vendors analysed in the report were: Bloomberg, CQG, CME Direct, Fidessa, Stellar Trading Systems and Trading Technologies (X_Trader and the new TT platform). Acuiti also compared third-party systems to in-house builds.
The vendors were rated across 17 metrics, 11 relating to functionality and six to customer service.
Acuiti is a management intelligence platform for the derivatives market and was launched in February 2019. To date over 550 senior executives in the derivatives market have joined the platform, which provides proprietary data and sentiment analysis to members of the network.
For more information and to get the report, click here.
For more information, contact Will Mitting
Tel.: +44 (0) 203 998 9190
Acuiti is a management intelligence platform designed to provide senior executives with unparalleled insight into business operations and industry-wide performance. Acuiti helps identify market trends, enhance decision-making and benchmark company performance. The platform anonymises and aggregates information from its exclusive network of senior industry figures to provide insightful in-depth analysis. Acuiti publishes the monthly Derivatives Insight Report and operates private anonymous networks for peers to collaborate on regulatory and operational change.