Securities Finance: BUILD vs BUY
- Ross Levin
- Dec 22, 2015
- 2 min read
The topic of this post is probably the most talked about by anyone in the industry. After all, the decision to build system in house vs buying it shrink-wrapped is going to either showcase your success or will haunt you for as long as you use the system for your business.
In the early days of the industry when all trading desks where separated and operating as individual profit centers, the problem was very easy to tackle – there were very specific vendors who would provide a highly specialized software covering just one market segment or one product type. So, the typical path was to subscribe to or buy this software, build an in-house system on top of it, and then enhance this system as the issues would arise.
Nowadays, when the industry is moving towards enterprise-wide platforms, all the desks that used to be separated are now intertwined. A typical Securities Finance business will have the responsibilities of Securities Lending, Repo, Collateral Management, and, in many cases, Synthetic Financing.
So, how do you make the decision of build vs buy in this new highly homogenous world?
Among many parameters you will look at while selecting the right vendors, these are probably the most important ones:
Conformation to your organization’s policies
Cloud based implementation
SLA metrics and support availability
Interoperability with other systems and market standards
Market data availability
From the business perspective, you also need to make a decision on what business services you are looking to build/replace/enhance.
Unfortunately, among many vendors that currently offer their services in Securities Finance space, NONE has all the built-in components that you may require. Additionally, depending on the size and the financial stability of the vendor, you may need to invest some time into the onboarding process.
The bottom line is Vendor Selection Process and Build vs Buy Evaluation are serious projects that need to be carefully managed as there are many pitfalls and underwater currents.
Ready to go ahead with this process? Primetech Management has almost 20 years of expertise in this space. We know all vendors, their capabilities, hidden costs, implementation and support options. Contact us for a confidential assessment.
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