Contango digs into technology

Contango digs into technology
By Jim Kharouf
Talk to enough people in the technology space you’ll find there is no sweet spot for technology. It’s a continuous matching of new ideas and technologies with client and regulatory demands, each with limited shelf life.
Finding the right technologies that meet trading demands, risk and collateral management plus regulatory requirements in today’s market isn’t easy. Against this backdrop which is sometimes exciting and other times distracting, one firm is looking to establish a niche in the industry. Contango Markets, a suburban London-based consulting firm founded in 1999 by Clive Furness, sees an opportunity. The firm recently launched a separate division called Contango Operations which is focused on the technology implementation for firms. 
“Increasingly, we’re finding that the post-trade was more about practical help with real operational problems, rather than strategic positioning,” said Furness, managing director of Contango Markets. “I felt more and more that we needed to split the operations part, where it becomes very practical, away from Contango Markets, the consultancy part. So Contango Markets remains the consultancy and will continue to focus on the whole of the lifecycle of the asset class. But when that becomes an operational project or issue, and clients want to outsource, that’s where we’ll come in with Contango Operations.”
Contango Operations may be onto something as more firms look to outsource the IT component of their businesses. While there will always be value for some firms to maintain proprietary IT groups, the commoditization of technology today means that many firms no longer need teams of IT guys to run operations, yet still need specialized solutions to conform to industry demands and rules. 
“There are huge operational issues still in the market,” Furness said. “So for X brokerage firm, there are still huge regulatory reporting issues. Companies have cut back on their operations teams in line with cost cutting in all areas. And realistically, they don’t have the specialist knowledge they need to deliver solutions to these major problems, which could cause regulatory trouble.”
This is not a new issue for financial markets participants. IT consulting firms have long been around to provide oversight and implementation, but Furness believes the demand is higher than it has ever been. 
The firm is focused primarily on the clearing and collateral management segment across all OTC and exchange traded derivatives, compliance as well as connectivity at the front-, middle- and back office levels. As the new regulations take hold, Furness believes those firms with the best technology and vision will be those that will lead.
“Technology has to work with other technology,” he said. “The legacy systems that do only one thing, especially with the pace of the environment we work in, is no longer sustainable.”
****In recent months, we’ve sat down for video interviews you may want to watch: Rick Lane, chief technology officer at Trading Technologies, who is leading TT’s efforts to rebuild its entire technology infrastructure, and Jeremie Bacon, president of ORC Americas who spoke about that firm’s efforts to create modular technology that is easily adapted to systems and Justin Llewellyn-Jones, chief operating officer of Fidessa, who said the introduction of FIX will change the vendor space. In other words, technology is getting more flexible and adaptive to the current and future needs.
Category:Contango Markets
Category:Consulting Firms