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10:34 AM
Brett Berkowitz
Brett Berkowitz

Every Trader Needs An Entourage

Vincent Chase had his boys in LA. Carrie Bradshaw had her girls in NYC. They traveled in packs because each character offered something unique -- whether it was Ari's neurotic drive or Samantha's wild appetites they were part of a team. In short, the Entourage wouldn't have been an entourage without the entire gang.

As fictitious as these characters are, there is something to be said about group dynamics in real life, because more often than not, people work in unison with others. Look around you -- how many of your colleagues have you interacted with today, be it by phone, e-mail or IM?

Firms are continually investing in the technology that sits on traders' desks. Whether it's new applications aimed at increasing productivity and efficiency or new desktop devices that improve connectivity to their contacts, it's no secret that a firm's primary focus is on the needs of their traders. It's also not a secret that a trader does not work alone. In fact, it is estimated that at the world's largest banks, there is an average of 3 to 5 people supporting each trader. This "entourage" may consist of Economists, Research Analysts, Compliance Officers or a variety of other roles but they share one common mission: Assist the trader and guide the trade through its lifecycle as efficiently as possible.

With the dynamic nature of today's financial markets there is an ever-growing need to connect these "non-traders" directly into the trade lifecycle. While the drivers may vary, the need is constant. For example, regulatory changes like Sarbanes Oxley, MIFID and Dodd-Frank have helped highlight the need for financial institutions to increase transparency across the trade lifecycle. But let's face it, regulations or not, firms are constantly looking for an edge to differentiate themselves and remain competitive. One way to achieve this is by improving their internal communications infrastructure to enable their teams to communicate better, smarter and faster than ever before.

To borrow a page from MasterCard's "Priceless" ad campaign:

- Lack of transparency across the trade lifecycle: $2,000,000,000 in trading losses

- Improperly executed futures trades: $6,750,000 in CFTC fines

- Enabling all traders, trade support and compliance staff to seamlessly and instantly communicate across the entire trade lifecycle: Pricele$$

Mitigating post trade issues by plugging compliance and risk groups into the trade lifecycle earlier not only reduces costs, but also provides a superior product to the firm's customers. Both the regulatory and competitive drivers combined, create a perfect storm of requirements for increased collaboration, as well as a unified management interface, for both front and back office users. Many firms are now requiring the ability to manage traders and off floor users from a single platform, to audit usage and apply policy uniformly across their entire enterprise. This helps firms reduce the amount of backroom equipment while providing them greater control over the "how and who" of information dissemination. Additionally, this helps firms save significant amounts of money by eliminating racks of costly third party equipment in the backroom, non-integrated end user devices and the associated maintenance cost of each.

While the future of the market is anyone's guess, what we do know is simply this: Collaboration is key. Traders alone can be a rather powerful force but with the backing of their entourage, they just might become a force to be reckoned with.

Brett Berkowitz is senior manager of product management for IPC and a blogger for the firm's Trading Comms 20-20 blog.

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