Market access

Market access systems are the intermediary bricks in the IT system between banks' in-house applications and the connections made available by the various markets. These systems have two functions:

  • To receive information from the markets
  • To send orders to those same markets


Challenges


The most sought after quality in these systems is responsiveness. Most applications that depend on market access systems need to send and receive information in real time. The systems are therefore optimised in terms of speed.  
Market access systems are critical to the businesses that use them, making robustness and availability other important factors.
 
Market access systems make it possible to connect to different markets. The objective is to mask the technical specificities of each market to offer a uniform service for client applications. Events on the stock exchanges must be transparent.
 

Missions


Our consultants work as project teams. Generally programmed using C++, these highly technical systems represent a considerable challenge even for the best engineers. We also work as contractors to write the specifications for upgrading the systems.
 
Our consultants also work on managing the production of these systems. The difficulties described above make these missions particularly interesting. They consist of:
  • Managing incidents and user requests
  • Deploying new releases
  • Monitoring the condition of the market access system
  • Working on projects to improve the system.



Future


With the growth of electronic trading, or even low latency trading, the pressures on these systems will be further exacerbated.
 
The teams are also looking for new solutions to automate integration and non-regression tests for these systems.

Market making

The presence of market makers is the predominant way in which financial markets are organised and it is one of the main activities of corporate and investment banks. There are market makers for all types of basic products and financial derivatives.




Challenges


This activity is now extremely automated. It requires an IT system capable of processing the huge quantity of information generated by the markets in real time and then calculating and placing orders to the right level. All parts of the IT system are involved: the server and network infrastructure and applications. Certain desks specialise in low latency and for them every millisecond counts!
 
Competition between players is fierce. The slightest delay or time-lag in relation to the market is exploited. The speed, accuracy and robustness of the IT system are extremely critical factors for banks as their financial results depend on them. So they continuously try to improve these aspects of their systems in order to remain competitive market makers



Missions


Production management is one of the most interesting parts of these activities. Our teams provide support for the market making desks by helping to:
  • Manage incidents and user requests
  • Deploy new releases
  • Monitor the condition of the IT system, and by
  • Working on projects to improve the system

These missions, sometimes carried out in the trading room itself, are excellent springboards for a career in the financial markets.
 
The project teams are also responsible for other interesting tasks. They are continuously designing solutions to improve the speed and robustness of IT systems. In addition to understanding the technical complexities, they are also required to demonstrate reactivity to business needs.



Future


The automation of these businesses is set to continue. With the creation of new and organised markets, new regulations and the emergence of other markets, it is safe to assume that there will be numerous IT projects over the coming years.

Counterparty risk

Any financial transaction involving long term undertakings is exposed to counterparty risk, the risk that a party does not honour its commitments because it does not have the means or because it is bankrupt. Following the subprime crisis and its after effects, counterparty risk has become an inevitable additional risk alongside market risk when managing financial transactions.


Challenges


The existence of this risk makes it necessary to constitute reserves in order to ensure the solidity of financial institutions even if a counterparty defaults. The financial authorities (the French financial markets authority - AMF – and prudential control authority - ACP, for example) impose equity ratios to be held in reserve and recommend risk assessment methods. In case of inaccuracies, the authorities will demand that the most conservative assessment be used.
 
The challenge for financial institutions is therefore to apply these regulations and recommendations while being as precise as possible to avoid locking up more equity than necessary. These assessments use algorithms that consume large amounts of power, processing time and data (e.g. Value-at-Risk, Monte Carlo Simulation and correlation calculation). These mathematical problems thus generate a technical IT challenge, with a direct financial impact.




Missions


Counterparty risk missions can cover a wide range of products and underlyings. Typical projects for these teams are:
  • Parallel computing and distribution on a computing grid
  • Increasing the number of simulations to further refine the assessment
  • Applying a recommendation made by the authorities to a type of market data, product or underlying
  • Improving correlation calculations to make them more accurate.
Functional issues are at the heart of every project.


Future


This is the key issue of the future for financial markets. All possible types of transaction need to be covered with calculations that are as accurate as possible. Finance is still a young field and counterparty risk calculation methods will change considerably over the years to come and it could well benefit from increasingly inexpensive processing capacity.