The reliance on technology in financial services has been well established for 40+ years. In the U.K., the so-called “Big Bang” of 1986 cemented the need for technology solutions in U.K. equity trading, continuing automation that had already begun in other markets across the world. Recently the question has been raised on whether there is a need for a Big Bang 2.0, but this time with a focus on processing efficiency rather than execution efficiency.
In those early days of financial services technology, the number of standardized vendor-supplied platforms was limited. The major players in financial services invested heavily in bespoke platforms out of necessity and out of a belief that they would gain a competitive edge by building solutions across the front-to-back process.
FIS® was one of the first firms to identify the opportunity to provide platforms that performed the standardized and often complex processing, avoiding the use of error-prone manual work. Since then we’ve established multiple securities finance and collateral platforms that are fundamental to the smooth operation of these markets, investing in each to keep pace with the functional needs of the marketplace and the rapidly evolving technical landscape.
Staying ahead of trends
Now we’re actively building the next generation of market-leading platforms across the front, middle and back office. We’re employing our deep experience in the securities finance and collateral markets to provide tools for more informed trading decisions, higher process automation and easier integration through open application programming interfaces (APIs) and standardized market connectivity. This reflects the increasing crossover of traditional securities finance and collateral business operations, which has led to the consolidation of functions to address the securities finance value chain more holistically and to better support businesses that no longer operate in silos.
The FIS securities finance and collateral reference architecture reflects this business consolidation, the increased need for flexibility, the rapid pace of change in the business model and the challenges inherent in integrating any platform into a client’s end-to-end application ecosystem for reference data, market data, securities settlements, payments and more.
However, staying current on technology trends is not an academic exercise for us; it’s based on identifying customer-centric benefits. How will the technical investment benefit our customers? The reference architecture supports the high availability and scalability requirements that large-scale global market participants demand given their reliance on technology platforms. Our decisions on the use of new technologies are always founded on identifying the benefits that will be brought to customers. For example:
- Optimizing the allocation of collateral using linear programming algorithms
- Increasing the automation of front-office processes with advanced workflow tools
- Improving the profitability of securities lending trading activity with artificial intelligence (AI) and machine learning (ML) algorithms
- Simplifying platform upgrades by delivering independently deployable services in support of evolving regulatory requirements such as SFTR, UMR and CSDR
- Providing extensive reporting capabilities via a rich REST API library to support customer-specific needs, including the ability to integrate with data analytics platforms such as Hadoop and out-of-the-box custom reporting universes through tools such as Business Object, Tableau and more
FIS securities finance and collateral – Reference architecture
The FIS securities finance and collateral reference architecture also lays the foundation for building future solutions based on seven principles:
- Event-driven, service-oriented architecture (SOA)
The reference architecture defines the use of microservices to simplify deployment, provide easier upgrade paths and support greater platform scalability through elastic cloud scaling models. In addition, the architecture enables the integration of AI and ML components to turbo-boost the processing automation.
- Open APIs for real-time connectivity
Technology has matured considerably in this space with greater standardization and widespread adoption of standards. The reference architecture utilizes these to facilitate real-time connectivity to market infrastructure providers, including ECNs, CSDs, custodians, trading venues, exchanges, tri-party agents and CCPs.
- Industry-standard specifications
The increased availability of industry-standard specifications provides an opportunity to simplify application implementation, integration and upgrades. These are included across the reference architecture:
- REST APIs that are fully compliant with OpenAPI specifications
- Full IDP integration with support for SAML and OpenID
- Implementation of core Common Domain Model concepts, which standardizes the modeling and documentation of trade events and therefore simplifies trade execution
- Cloud-native technology
Customers are overcoming any concerns and initial hesitation in deploying business-critical applications in the cloud. In fact, we’re increasingly seeing requests from clients on how our solution suite can be delivered via cloud. The reference architecture embeds cloud deployment at its core, taking full advantage of cloud-native services to deliver software as a container and improved capabilities for scaling, throttling, fault tolerance, reusability, resiliency and monitoring. The reference architecture is built on cloud technology to drive reductions in the total cost of ownership.
- Software as a container deployment
Simplifying and de-risking platform upgrades makes keeping current on the latest version a more achievable target. This ensures that the business benefits from the latest features added to the platform, including:
- Deployment automation using standards such as Docker, Kubernetes, OpenShift and Helm Deployments
- Certification against major Kubernetes infrastructure offered by Azure AKS and Amazon EKS
FIS securities finance and collateral – Web UI
- Rich and responsive user experience
We’ve designed a modern user interface based on the latest version of Angular to provide a rich and responsive user experience and an intuitive and configurable UI that reflects current design patterns and usability best practices. There’s a wealth of data in modern securities finance and collateral platforms. Being able to summarize it to identify patterns of activity or identify exceptions is fundamental to the value-add.
- Simplified custom portal integration
The complex, cross-business application environment that many clients operate often requires the consolidation of data in a portal. The reference architecture supports this through secure REST APIs, including full IDP integration.
The FIS next-generation securities and collateral solution components underpin the smooth operation of the market today. With the accelerated investment in this reference application architecture they will continue to stay at the heart of the market, providing functionally rich and technically advanced solutions that deliver real benefits to the industry. Learn more.