Lessons Learned |  tabbFORUM

It’s hard to believe that 2011 is wrapping up and as we move into the waning days of the year, we reflect on both the positive results and challenges faced. 

Throughout the course of 2011, we’ve identified some real challenges facing back office, operations and IT, in addition to the front office staff that supports everyone else. 

That said, and as disconcerting as it is, the critical pillar of our industry that is being challenged right across this country and beyond is...the truth. A friend of mine once said “There are three sides to every argument. The two sides that disagree and the truth.” 

This is particularly true of the times we live in. All across Canada we've been witness to misinformation, misconceptions, misunderstandings and a real lack of knowledge of: 

1) the processes existing in the financial world today

2) the players in the marketplace and how they interact

3) the systems that deal with enormous amounts of data every day

4) the criticality of the data

5) what the results are when you don't fully understand them 

In some cases, people think the financial industry’s problems are “all about the data,” while other people think the problems stem from “it’s about the processes.” Then again, in still other cases, some think problems exist due to “lack of understanding how the entire marketplace inter-relates to manage the enormous volumes that exist today.” If only it were that easy. 

Increasingly, the name of the game is to be “smarter, faster OR dirtier.” Let’s face it, our world is increasingly in flux. What are some of the issues we’ll be facing next year? Here are a couple: Will CDS become a for profit center after the Maple deal? Will smaller firms be able to stay independent in this market climate? 

Perhaps it’s time to open the discussion on having a comprehensive and universal real-time back office system so that T+1 can be a reality to deal with the type of trading challenges that are in the markets today. Perhaps it’s time to underwrite a system that can deal with the way the market really does work; just as the front office systems that deal with the enormous volumes and lightning fast execution speeds. 

I know this is quite an endeavor (and the larger system providers dealing with clearing and settlement would argue, why fix it when it keeps hobbling along?) but if a little firm in Vancouver was able to come up with a back office system that’s running in several firms across Canada, surely there are other smart and talented people who can take on this seemingly impossible challenge and change the world? 

Let’s face it, most of the challenges that exist today in the financial sector are the result of really smart people being able to devise new methods to create and grow wealth. However, the lack of systems and processes able to keep up with these ideas on the supporting side of the industry (unlike nanosecond-style trade matching front end systems) is all too real. The number of processes in place to deal with all the data being moved about is formidable. But there's one aspect that is consistent and can make life for a broker/dealer somewhat easier to manage (in addition to having smarter, faster systems). That’s better educated and better informed personnel. 

Provide your courageous souls who are supporting this vast structure of a marketplace the knowledge that is due them so they can be successful. 

Collectively, maybe we can stimulate and excite the next Bill Gates or Steve Jobs to come up with a nanosecond clearing and settlement system. Wouldn’t that be a wonder. Of course, a whole new set of challenges will exist when it does occur! 

That in itself is the greatness of the human genius. Always striving to reach unimaginable heights.