The goal is to reduce operational overhead per trade as much as possible. In isolation technological innovation can offer a firm substantial savings but when innovation is adopted market-wide it offers the possibility of exponentially decreasing cost and overhead while at the same time changing the competitive focus towards innovation. A leaner, more innovative market is good news for all participants and offers true competition derived from intelligent, proactive business models rather than the more traditional savings afforded by process and system re-engineering. Internally XML within organizations offers a way to integrate feeds from various applications. It facilitates data integration and consolidation which in turn offers many advantages to financial firms.
Firms can create hubs for risk information, trade information, customer information etc.
It offers firms the ability to create architectures that are easily complimented and interchangeable. This presents the advantage of no longer having to rely on one supplier exclusively for any given solution. This removes the time honoured problem of being dependent on one legacy or proprietary system. Given the complexity associated with many of the products in the capital markets previous attempts to regulate and define them have failed. The fact that OTC products, for example,change with such rapidity means that the communication and confirmation of details of these transactions between counterparties has typically been highly manual which bring with them the associated human errors and related delays in processing.