Part 1: What the Infrastructure Needs to do
Trades and Products
Where do Trades Come From?
The Purpose of the Infrastructure
Part 2: The Problems with Trade Processing Infrastructure
The Evolution of Technical Complexity
The Regulatory Challenges
The Complexity Cycle
Part 3: Historic Approaches to Transformation
Functionalisation, aka “Factories”
The Golden Middle
Part 4: New Approaches to Infrastructure
Cloud and Utilities
Artificial Intelligence and Robotics
Big Data and Analytics
Blockchain/Distributed Ledger Technology
Distributed Ledger Technology: Hybrid Approach
From the arrival of the iron ore on Monday, that iron ore was in a car going out to a client on Friday.
– Norman Bodek on the Ford Model T production line
If multiple systems interacting is one of the root causes of the complexity described in this book, surely the obvious answer is the front-to-back system? It is a system that does all (or at least most) of the trade processing for one or more asset classes from trade capture to settlement. At the very least, it would get rid of all the breaks between systems that are involved in processing each asset class.
In this chapter, we will describe the origin of the idea and explore the way some of the main types of front-to-back system can provide a front-to-back solution for one or more asset classes. Using a front-to-back system can be very successful in some contexts, but the key value of this chapter is to help the reader understand the key factors that influence success or failure (see Figure 12.1).
DEFINING THE APPROACH
In Part 1 of this book, we traced the evolution of markets infrastructure away from front-to-back systems to a loosely coupled infrastructure of many communicating systems. Over time, a number of