10 Critical Business Technology Issues for The Street

In 2007, firms will face the daunting full rollout of Reg NMS in the U.S. and the likely beginning of MiFID implementation in Europe while they continue to struggle with data privacy, OTC derivatives, a shortage of talent and the potential of Web 2.0, among other challenges.

After another record year in 2006, financial services companies are looking for an equally profitable 2007. In sound financial shape and riding a robust economy into the new year, financial organizations are hoping for more of the same in 2007. But despite the strong economy, much about 2007 will be drastically different.

A new democratic Congress may turn a spotlight on big business, possibly changing some very business-friendly tax rules and regulatory precedents that were set during the Republican-lead Congresses of the last 13 years.

The much anticipated Reg NMS finally will go into full swing this year. Rather than spending time and resources preparing for the new market structure, firms will need to quickly assess if their technology investments are sufficient for the new marketplace. If not, alternatives will need to be implemented -- quickly. And like Reg NMS, MiFID will test the structure and the preparations of financial firms doing business in Europe, though full implementation may be delayed further.

Personal data security, although always a focus for financial firms, may get pushed front and center as various states -- and possibly Congress -- move to further protect personal financial information. And the topic of Web 2.0 may have firms thinking about other ways to connect to customers as the idea of interactive, connected and extremely customizable Web offerings takes hold in the personal financial area.

These are just a few of the trends that financial services organizations will contend with in 2007. In this issue, you will find 10 critical topics on which firms will be focusing their resources in 2007, along with commentary from senior-level buy-side technology leaders about what they will be focusing on in the coming year.

Each of the 10 topics has been condensed to a single page, a quick-reference guide that gives you the information in an easy-to-digest format. Of course, since these 10 topics will be of importance to the industry throughout 2007, expect to see many more features and articles from Wall Street & Technology that focus on these challenges.

Data Privacy: Financial Institutions Try to Keep Data Breaches Down in 2007
Several big-name data breaches made 2006 an ugly year for the securities industry, and security and privacy professionals are hoping to bring the problem to a halt this year. more...

In the Search of Liquidity: The Time Is Now
Now that Reg NMS is finally here, are firms ready to access 30 or more trading venues in their search for liquidity? After a year of investment in technology, firms need to demonstrate that their systems are up to the challenge.

The Buy Side Jumps on Board the Push to Automate OTC Derivatives
Now that traditional buy-side firms and hedge funds are increasingly investing in credit derivatives, the fastest-growing product in the OTC derivatives space, the industry is focusing on automating post-trade processes to reduce operational risk.

Firms Ready to Dive Into China's Financial Markets
The opening of the huge Chinese financial services sector to foreign-based institutions presents a gamut of opportunities -- whether in retail and corporate banking, investment banking or asset management -- for North American and European firms.

The Right Stuff: A Good IT Manager Is Hard to Find
It's going to be a good year to find a new job, as the shrinking talent pool has created a strong job market for IT workers with strong business acumen.

NYSE Requests a Four-Week Extension of the Reg NMS Deadline
Although it has been beaten to death by industry analysts and press, the importance of the changes to the U.S. securities industry spurred by Reg NMS cannot be overstated. The industry anxiously awaits full implementation of the regulation in 2007.

A Market Turned Upside Down
The European Union's Markets in Financial Instruments Directive (MiFID) is scheduled to go into effect in November 2007. Even U.S.-based firms will need to have a thorough strategic plan for compliance in order to stay competitive in the global markets.

Wealth Managers Turn to Unified Managed Accounts to Better Serve Wealthy Clients
Unified managed accounts and unified managed households are part of a growing trend to electronically aggregate a client's holdings in as close to real time as possible. The goal of such cross-product, cross-institution and cross-individual accounts is superior portfolio management, including tax optimization and risk mitigation.

Web 2.0 Enriches Applications and Services, Making Them More Compelling to Users
One of the hottest buzzwords of late, Web 2.0 refers to Rich Internet Applications (RIAs) that use the Internet as a platform to create interactive user interfaces that resemble PC-based applications. Typically, RIAs emphasize online collaboration among users.

Surging Electronic Trading Volumes and Reg NMS Require Financial Firms to Enhance Underlying Technology Infrastructures
Electronic trading is exploding and firms are rapidly expanding technology infrastructure to handle the increases in trade volumes and associated market data and messaging.

SPECIAL REPORT

SMS Messaging and Asynchronous Data/Voice Capabilities Will Shape 2007 Wireless Market
SMS and text messaging will take center stage for financial organizations that support wireless access for clients, reports Joseph Ferra, chief wireless officer at Boston-based Fidelity Investments. Those trends, combined with the introduction of asynchronous data and voice capabilities on phones, will drive increased wireless usage for financial transactions.

Putnam's 64-bit Architecture and Outsourcing Strategy Allows IT to Focus on Core Competencies
Boston-based Putnam Investments has leverage outsourcing of certain processes so business leaders and technology professionals can focus on projects that provide specific value to the business, according to Philippe Bibi, Putnam's CTO.

Web 2.0 and Data Privacy Will Define Financial Services in 2007, Says Steve Rapp, SVP & CIO, Nicholas Applegate.
The move to further protect client data and the maturation of Web 2.0 related businesses are two topics that will define financial services in 2007, according to Steve Rapp, senior vice president and CTO at San Diego-based Nicholas Applegate Capital Management.

Mellon Focused on Bank of New York Merger and new Private Wealth Management Platform
Mellon Private Wealth Management looking to take advantage of the Bank of New York's international reach all while launching a new platform that will transform the way wealth managers interact with ultra-high net worth clients' other advisors, according to Tim Tully, SVP & COO, Mellon Private Wealth Management.

Cross-Asset Algorithmic Trading Goes Mainstream, While Software As a Service Gains Traction
More buy-side firms will adopt cross-asset class algorithmic trading in 2007, while software as a service will again be en vogue, as the comfort level with the technology and Web 2.0 functionality help adoption rates, says David Dart, a former managing director and CIO Americas with a large German bank (as of Dec. 31, 2006).

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