The trading industry has taken a significant hit during the pandemic. The World Trade Organisation estimated a potential decline in trade of between 13 - 32 per cent last year, while the International Chamber of Commerce estimated that between US$1.9 - 5.0 trillion capacity in the trade credit market is required to recover the global economy.
Not only has the pandemic taken a huge toll on the trading market, COVID has driven the need for change on the trading floor.
Trading is being held-back by legacy
Prior to 2020, trading platforms were office-bound and dependent on fixed line (private wire) connectivity between endpoints. Traders could purchase Time-Division Multiplexing (TDM) Private Wire platforms and a dedicated audio channel to connect traders between two or more organisations.
However, these legacy Private Wire platforms are now up to forty years old – dating back to the 1980s and 90s. As you can imagine, they were often extremely static and slow to provision or change. And they are generally expensive, as prices were based on the distance between each trade location.
Legacy systems also had to be pre-ordered and were fixed in nature, meaning traders had to work from a set location to use them, adding to an already significant time investment when establishing new connections. In fact, prior to the pandemic, no one had ever traded from home because it was simply “not part of the playbook.”
The move to IP in remote trading
COVID-19 hit the world, and trading, hard. As trading floors came to a halt and traders moved out of offices and into home workspaces, trading companies began looking to alternative solutions. As a stopgap, many companies began their move toward IP-based systems via a hybrid solution – by migrating existing infrastructure to IP-based handsets while retaining services on their legacy systems.
Traders were offered a brief period of respite from the Commodity Futures Trading Commission at the start of the pandemic regarding a broad spectrum of requirements. Critical compliance regulations including oral communication record keeping and timestamping were relaxed to allow time for businesses to move to safe working from home practices.
However, this relief period will finish in the coming weeks and businesses must again comply with updated policies from the Financial Conduct Authority that require all relevant communications to be recorded when working outside of the office.
As many businesses continue to work remotely we’re seeing increased demand for solutions that meet risk and compliance obligations. According to Greenwich Associates, 69 per cent of buy-side compliance executives expect to see budgets increase this year to combat compliance risk factors from employees working from home and in remote locations.
Introducing Trader Voice
We were all taken by surprise when the COVID-19 pandemic hit. The time since has largely been a learning curve for the entire trading industry. Traders are now preparing themselves for future disruption by creating a virtual trading floor with the adoption of IP-based technology. These solutions are more flexible, scalable, and quick to adapt, setting traders up to succeed - even if we face another unexpected event.
Telstra has developed a modern, IP-based solution for trader connectivity, Trader Voice SIP Connect, which can be used to replace a range of legacy systems.
Trader Voice makes it simple for IT teams to extend the trading floor over an internet connection, a dedicated data service and through the Public Switched Telephone Network (PSTN). Telstra’s service allows trading companies to connect with people working from home and record content through trunk-side recording capabilities to meet compliance requirements. It also enables multiple IP services to connect simultaneously for greater cost efficiency, agility, and flexibility.
At Telstra, we are a trader platform agnostic global carrier, with the scalability to support interoperability between legacy TDM and SIP-based connectivity. We can integrate your legacy TDM platforms into our solution so you can maximise your investments, supporting easy migration, and minimising business disruption.
We’re delivering a new era of SIP and PSTN connectivity by creating an ecosystem that facilitates interoperability between Trader Turret provider technologies, new and old. And we’re doing it with a consumption-based billing model based on usage and not distance.