As many global financial institutions (FSIs) begin to bring traders back to the floor, my goal as a trader voice executive and thought leader is to help consumers of trader voice technology make informed decisions about how to proceed.

I aim to help financial institutions’ leadership teams evaluate their existing trader voice decisions and processes to see if they are using the tools best suited to their firms’ needs. 

The hard reality is that your trader voice solution manufacturer and/or trader voice network service provider is not always forthcoming regarding what is best for your firms’ needs because their job is to sell. In other cases, the personnel employed to manage your trader voice technologies and voice networks often rely on comfortable, outdated technology and can be resistant to learning voice over internet protocol (VoIP) telephony. We all have a tendency to retreat to comfort, but the trend makes voice communication on your trading floor a major risk saturated with various technologies that have been patched for years to meet the demanding needs of front-office users.

“Failure is not fatal, but failure to change might be.” – John Wooden, legendary basketball coach

We’ve been here before over the last two decades.

A number of events caused FSIs to invoke their business continuity plans (BCP) that disrupted the operation of the trading floors trader voice communications: terrorist attacks, economic downturn, power failures, natural disasters, pandemic/epidemic diseases, and denial of entry to their offices.

September 11, 2001 Terrorist Attacks

The World Trade Center was a major communication hub for all carriers including trader voice network providers. It took years to rewire TDM T1/E1s to new or existing carrier facilities to restore private wire connectivity to trading floors. Instead of looking for an IP alternative to replace the point-to-point TDM connections, trader voice network providers  just kept the existing way of connectivity in place. Why?

2003 SARS outbreak in Canada

Traders couldn’t access their office voice trading systems during this crisis, which gave rise to the soft turret. However, the new soft turret solutions failed to progress the industry like they should have done. Instead of being hosted, they took up resources in existing systems to give a limited number of ‘key personnel’ home access to their TDM private wires. Essentially, they were based on a hardware-first mindset. Soft turrets didn’t allow firms to grow or scale due to the capacity limitations of the existing trading systems. To increase capacity, admins and trading system manufacturers had to add more equipment to the on-premise cabinets.

2007-2008 Global Financial Crisis

This crash resulted in stricter compliance and surveillance regulations, including trade reconstruction with increased voice recordings depending on the asset class; multiple mergers and acquisitions (M&A) of FSIs with various trader voice solutions and multiple trader voice network providers all needed to be integrated with the acquiring firm’s existing systems. It created a huge technical mess.

2011 Major Earthquake and Tsunami Driven Nuclear Crisis

These natural disaster-driven crises required the install of soft turrets leveraging APAC trading systems to give their users in Japan with power at home the ability to communicate with customers. The providers could not deliver due to the size of the existing systems and lack of available resources. This crisis exposed the inability of legacy trading turret systems to scale the way customers need or as they expect from their unified communications environment.

2019-20 COVID-19 Global Pandemic

Due to the pandemic, financial institutions are currently working from home with limited personnel permitted in offices or trading floors. Because of the failure to develop better trader voice solutions after the aforementioned events this caused excessive spend on WFH trader voice solutions and broke the existing BCP/disaster recovery models in place. Wall Street never planned to have traders/brokers working from home, but must now determine the  solutions for ongoing remote work and the possibility of another crisis.

Yet, here we are again in 2021.

Nothing is more expensive than a missed opportunity. Will FSIs take advantage of lessons learned during the pandemic? I’m concerned with the tendency to trust the existing trader voice providers and the solutions they offer. As we have seen in other technology fields, driving change in a large organization that has had success with older systems is hard. The reality of sales quotas, financial commitments, legacy investment—and yes, at times apathy—leads to an over-focus on quarter-to-quarter and year-after-year renewals rather than evolution.

Innovation often comes from entrants with new trader voice solutions and change often comes only when the industry demands it, forcing existing solution providers to change. Having worked on the inside for years, I’ve seen it first hand and have been witness to the all too pervasive mentality of: we have debt, sell anything even if they don’t need it.

Providing the right solution for your customer when it can impact your existing revenue can be hard. Moving away from what you know can be hard. Trader voice offerings are still struggling, even as the market demands flexible, cloud-based solutions to avoid the challenges of the past. The physical turret, soft turret, and cloud solutions continue to connect to TDM trading systems/private wires incorporating various manufacturers’ voice recorders that are inherently designed to be on a customer premise, because that is the model they know. It’s time to evolve. See Cloud Compliance & Trader Voice

“Specialists are people who always repeat the same mistakes.” – Walter Gropius, Pioneering master of modernist architecture

See Part 2 of 2 where we discuss what trader voice providers have learned…

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