Cross-Asset Trading special report


November 2011 - sponsored by: Caplin, OpenLink, SunGard, Sybase

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Confusion Reigns

Typical. You come up with what you assume is a well-defined and therefore universally understood topic for a virtual roundtable, only to find that due to semantics and our propensity to generalize, confusion reigns ... again. So, before we get down to business, for the purposes of this special report, "cross-asset trading" refers to the ability of a single trading platform to support the trading and processing of multiple asset classes, and by so doing, better manage risk and position-level reporting. It very definitely does not refer to the much maligned-and illegal on some exchanges-practice of "cross trading," where a broker offsets buy and sell orders of the same size and the same stock without recording them on the exchange on which the trade is executed.

Whereas in the past, financial services firms could afford to specialize in a single asset class traded on a single market or geography, that scenario is no longer the case due to shrinking margins and therefore returns. As a result, firms have been forced to diversify their portfolios to include asset classes that typically they wouldn't have considered appropriate in the past due to their complexity and the lack of internal technology they had in place to support the trading of such instruments.

This challenge, however, is being addressed by a growing community of third-party technology vendors providing firms with front-, middle- and back-office technology with the requisite extensibility and flexibility to support the trading of a wide range of assets from a single, integrated platform. Naturally, data plays a crucial role in this endeavor, as we will see in the Q&A on page 7, but then it pretty much does for just about every trading-related business process across the buy and the sell side. That much hasn't changed.

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