Financial services organisations are spending
significantly more on IT to mitigate risk and manage payments, a
new report says.
The trading and brokerage, fund management, hedge fund,
investments and securities services sectors are increasingly
turning to technology to keep up with growth in management
information, compliance and the pressure to innovate within a
highly competitive marketplace.
The report, “Financial Markets Technology – trends for financial
services institutions” by analyst
Datamonitor, said investments and securities
services firms are investing heavily in risk management systems and
fund managers are increasing IT spend in their payment systems.
Amit Shah, Datamonitor financial services technology analyst and
author of the study said: “The necessity to offer superior
technology and connectivity options to customers is driving heavy
investment for these segments. Institutions have realised that
technology investment is vital for long-term sustainability and
maintaining competitive par, thus for technology vendors,
opportunities will continue to present themselves in 2007.”
He also expected a strong uptake of electronic trading in the near
future. “At present only a handful of firms are fully utilising the
capabilities of electronic trading. However, with upcoming
regulations such as Reg NMS and MiFID which advocate the need for
best execution, there will be strong uptake of electronic trading
throughout 2007,” says Shah.
The National Market System regulation (Reg NMS) from US
regulator the Securities and Exchange Commission (SEC) is
introducing new trading rules, designed to speed stock trading and
mandate brokers to execute trades at the best price. And the
Markets in Financial Instruments Directive (MiFID) comes into
effect in November 2007 to simplify cross-border European trading
in securities.
In addition, phishing and anti-money laundering initiatives have
emerged as key focus areas to satisfy regulatory requirements.
“Regulators have become less tolerant and expect firms operating
within their respective jurisdictions to have appropriate and
adequate risk measures and controls in place. As such, 38% of all
respondents in the study cite security measures as of paramount
importance. This is likely to continue well into 2007,” said
Shah.
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