Jill Sigelbaum is head of foreign exchange at Traiana.
What were the themes for your business in 2015?
The two major themes for Traiana were solving for the credit-risk issues in the market and delivering an integrated cross-asset buy-side post-trade solution.
We believe that addressing the credit risk in the market and putting in place technology solutions that mitigate this exposure will allow the market to grow.
Over the past year, Traiana has been working with the banks to design a credit-monitoring infrastructure that gives the credit providing prime and executing brokers full control over how their counterparts use their credit.
On one hand, in certain situations, credit is being over-allocated in the market. There is more credit being distributed across trading venues than the banks are actually providing their buy-side clients. The over-allocation of credit is necessary to accommodate the clients’ freedom to trade on many platforms and with any counterpart.
On the other hand, the very conservative credit providers are putting less credit in the market because they fear that they won’t be able to control how that credit is being used.
Either way, Traiana solves the problem by giving credit providers full control to move credit around from venue to venue systematically, based on how it’s being utilized. It gives the credit providers full control and therefore allows for “real” credit lines to be distributed.
The other major theme for Traiana was building out our post-trade solutions for the buy side. We now offer cross-asset trade processing for hedge funds and asset managers that includes messaging, allocations STP, confirmations and trade reporting.
What do you expect to see in 2016?
In the credit space, it is a matter of building the network of execution venues and we’re now over the hump. We have all the major ECNs and are building a network of single-dealer platforms as well. We will continue to add innovative capabilities to our platform, such as supporting more sophisticated credit relationships (e.g. client-to-client).
With credit allocation and control becoming less of an issue, we expect banks to have a greater comfort level in providing credit to existing clients and engaging with new clients that may have been perceived as too risky in the past. This, in turn, will increase trading.
In the past year, there have been two major prime brokers that have pulled back significantly and one of the main reasons they did so was because the uncontrolled risk was outweighing the value of the client. Traiana feels that if we provide the tools to the industry to manage and mitigate the risk, it will allow banks to again be profitable in providing credit to the buy-side industry.
Regarding the buy side, we are excited to continue offering execution agnostic, post-trade services across asset classes, such as foreign exchange, futures, equities, fixed income and others, that uniquely meet the evolving needs of this key trading community.
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