Patsystems to renegotiate connectivity contracts

The move could prove the first of many in an industry seemingly poised for a substantial shake-up as vendors offering electronic exchange connectivity look to generate revenues from existing relationships. It is no secret that a number of ISVs that 'bought' market share by offering discounted rates are facing difficulties realising profits.

Patsystems is also reappraising 20 third-party relationships with the view to terminating those that are a drain on its resources.

"Certain customers appear to have been offered use of patsystems’ products at a rate that created unfair competitive advantage over other patsystems’ customers or prospects," the company said. The firm added that in many cases such arrangements had been agreed by previous patsystems directors without the knowledge or approval of the full board.

In a recent interview with Risk magazine, Nick Garrow, Patsystems’ global head of sales, aired his thoughts on the future rationalisation of vendors in the industry: "I think the big trend that we’ll see this year will be consolidation," said Garrow. "I mean this from a number of angles: exchanges will consolidate through merger activity and the exchange technology will converge with other mainstream trading and risk systems."

Patsystems has allocated £1.1 million to upgrade its current technology platform, with a view to increasing sales prospects through a modified product range.

"ISVs will have to focus from a technology and delivery perspective on what area of the market they are after. I believe that there is only space for about five or six ISVs in the connectivity market," said Garrow.