Tell us about the focus around non-differentiating infrastructure
If you look at what a bank does, a bank has a lot of technology it does things like it connects them to their markets, and connects their customers using fixed. It has a framework for rooting messages and prices internally.
All of those bits, I don’t believe, differentiate one bank from another because we can sell it to all of the banks and they can do as good a job as us building it themselves. But it’s very costly and very time consuming.
However, there are also things like their algorithms, their smart-order routers, their pricing engines, and their price dissemination, which do this differentiate them. That’s what gives them a competitive advantage over their competitors, and that’s the area they should be focusing on.
If you look at a firm like Apple for example; they manufacture the iPhone, which is an incredibly successful business for them. It’s why they are sitting on a cash pile of $285 billion.
But crucially, they don’t make all of the components themselves. They don’t make the screens. They don’t make the memory chips. They don’t have mines to extract the minerals to make the cases etc.
I think banks should do the same: Focus on what differentiates them and makes them stand out from their competitors.
What’s your focus here today at the Fixed Income Leaders Summit?
We’ve got quite a number of banks, asset managers, and so on who use our technology across all asset classes.
Today we are illustrating some of those workflows. So, we’re showing our non-differentiating framework configured for a pricing model.
It takes in quotes from 3 price sources:
• Trade web
It consolidates those, and then a proprietary pricer – which would be a piece of differentiating intellectual property that the bank develops themselves – is creating the prices and responding to buy-side requests with prices for specific bonds.