17.08.2015

City software developers able to finance invoices

Big Bang shook the City of London to its foundations. On a single day at the end of October 1986, the whole framework for trading on the London Stock Exchange changed for ever. Gone were the two trader categories of Stock Broker and Jobber, replaced by a single, encompassing trading function. Gone too was the London Stock Exchange Floor where deals were, quite literally, made face to face around hexagonal ‘pitches’. The move to compete on level terms with overseas trading floors was seen by many as inevitable; its timing prompted by a combination of legal and political reforms intended to move London back to the forefront of the world’s financial markets.

While Big Bang itself was instantaneous, it had taken around five years for the City to prepare for this structural change. The transition could not have been made without IT resources that were just about keeping pace with the likely demand. Faster processors (tardy by today’s standards, of course) meant that software could be written to handle deals in near-real time. The winners and losers in dealing rooms were going to be defined by the split-second timing of transactions.

From that Autumn day almost thirty years ago to the present, IT specialists have been under constant pressure to support the dealing process; streamlining deals even further while ensuring compliance with the regulatory environment which accompanied the changing market mechanisms.

With deals appearing to have been completed almost before they start, there is an increasing demand for systems which help pack in as many deals as possible in a given window. Time in a dealing room when transactions are not taking place represents lost revenue that can never be recovered – similar to an aircraft taking off with empty seats. Systems which can monitor the most complex trading platforms for latency (delays in the execution of a transaction) and the flow rate of transactions are heavily in demand in this highly competitive arena.

Window on the world of deal making

One recent addition to the UK EXIM client portfolio has built what is being seen as the Holy Grail for today’s market makers, a cost-effective software solution that provides an independent, reactive window on to a dealing room’s trading and pricing systems. The information which this oversight provides helps simplify compliance procedures in that it yields an evidential paperless ‘paper-trail’ through transactions from start to finish.

In its housekeeping role, the system identifies where time is being lost along the dealing trail. In the event of a fault developing in one area of a platform, the focus can turn instantaneously to fault finding, while channelling investment elsewhere in the system. The ‘aircraft seat’ is filled before take-off and the opportunity for the deal is not lost to competitor dealing platforms.

The company which devised this solution is a classic SME being driven by its founders; both of whom have relevant experience amongst the Blue Chip trading organisations who form their actual and potential customer base. As with many other smaller businesses within the first three years, there is the question of funding orders.

Aware of the resources which UK EXIM could provide in such situations, the company’s Accountants made an introduction to this specialist financing arm of the TAEFL organisation. UK EXIM assessed the deal structure involved and agreed to fund the company’s invoices up to £50,000. Given the high quality of its client’s customers – all substantial City institutions – the credit risk was readily insurable.

Supported by the appropriate guarantees, the funding will help ensure that the software specialist can continue to deliver its solutions into a demanding customer base. UK EXIM is effectively doing for its client what that company is doing for the City trading platforms – allowing it to devote all of its capacity and resources to expediting deals.