Moore’s law states that the number of transistors on a microchip doubles every two years, while its cost is halved at the same time. It has provided significant growth in performance over the past few decades, allowing many applications to improve performance by upgrading hardware components without the need for structural changes.
Decades after Intel co-founder Robert E. Moore made this point in 1965, consumer technology continues to innovate, while technology powering mass markets has lagged behind. Although recent physical failures have slowed the evolution of Moore’s law, progress in distributed systems has continued to hit new heights. Most major markets, on the other hand, have not taken advantage of such technological advances and are still operating in the past.
The US $924.5 billion security industry still relies on mainframe technology from the 1980s. The result is fragmented systems and structures that leave market participants struggling to adapt to market changes and meet the needs of data-hungry investors and regulators.
To understand how we got here today, we need to look under the hood. The mainframes that have powered the world’s largest markets for decades were built to answer specific questions at a specific time. For many years, modern technology has been placed on top of ancient ruins, which only provide a short-term solution. Like building a new house on top of an old foundation, sooner or later the foundation will give way and the whole structure will collapse.
In short, silos have accumulated over time to the point where it is difficult for people to communicate rather than finding a way for technologies to communicate. This technical debt creates the broken processes that create the inefficiencies that plague companies today.
Investors, like all consumers, are accustomed to the services they want. They hope to be able to react quickly to market trends, and are looking to expand into other product categories such as crypto. Post-trade practices are challenged to meet these demands and provide the granularity, data visibility, and user experience that investors and regulators need.
From Cost Center to Competitive Advantage
For many companies, the way back to the office is “not visible” – until something goes wrong. In terms of collateral, interest, financial consequences, and penalties, the cost of a business failure is enormous. A global trade failure of just 2% is expected to result in revenue and losses of up to $3 billion.
The solution is to reduce manual intervention in favor of automation and cloud solutions. To make the most of it, banks and brokers need to reduce processes that increase the risk of errors and work instead with technology that empowers users to make smart decisions and identify potential risks throughout the transaction.
Improving post-trade tech is estimated to reduce costs by 20-30% in key areas such as data management, reconciliation, clearing and implementation, central office, regulatory reporting and overall performance. Adoption challenges are growing in all companies – for example, in 2021 Nasdaq partnered with AWS to create the next generation of cloud-based infrastructure in the world’s capital markets.
Simplifying the technology behind sales and post-sales services can transform from a cost center to a competitive advantage. But for many companies, an upgrade would require rewriting many systems with significant technical debt, and high investment and maintenance costs – a risky project with little chance of success.
Modern, high performance computers coexist with COBOL, and microservices with mainframes. But as the price of data continues to rise, those who invest in technology and power to move faster, the intraday market changes will come out on top.
Modern problems require modern solutions
A modern, single-source platform can optimize operations across teams, product groups and locations, reducing cost, complexity and risk. This makes it easy for novice managers, professional traders, and organizations to gain access to large markets. Founded in 2018, Clear Street is a fintech and non-banking company that builds innovative tools to enable market access for all participants.
Clear Street’s goal is to remove the old infrastructure used in the capital markets from scratch to create a cloud-based system designed to meet the modern needs of the global market. Its technology platform makes the market more efficient, while focusing on maximizing returns and reducing risk and cost for customers.
The company’s mission is to provide all market participants, from emerging managers to large corporations, with the tools and services they need to compete in today’s fast-paced markets. It was not immediately apparent that the power of destruction, the change in the administration, the administration of the administration, management the management of the management of the management of the management of the administrative management management the management of the management of the management of the management of the management of the management of The transportation administration of administration of administration of administration of carving the transportation process of transportation. The transportation process of finances is better) in the transportation process. In just a few years, the company processing about 2.5% of the known US volume, which is about $10 billion of work through its platform.
Clear Street takes proven technology from the world of Silicon Valley and applies it to financial markets. The company’s technology systems use modern cloud tools, including automated service calls, event-driven real-time processing, and scalable data storage — a stark contrast to the batch processes offered by mainframes. All of Clear Street’s software is built on a standardized and integrated technology, which enables these components to be seamlessly connected and integrated, eliminating the need for tedious communication processes.
It is time to reform the financial markets. To keep up with the current trends, companies will need to invest in technology to meet the needs of investors and regulators. Those who do will be part of building a modern, scalable future for capital markets – improving access, speed, and performance for all participants.
Clear Street is an independent, non-banking major developer of modern capital markets infrastructure. The goal of fintech is to create a single-source platform to support all types of businesses, in all financial sectors, all over the world. For more information visit https://clearstreet.io.