TT becomes latest service provider casualty

TT’s problems are shared by other service providers, which are seeing contracts dry up at banks that are imposing rigorous cost controls in an attempt to boost already thin profits. The risk management industry has largely weathered the general malaise in IT, which has seen big lay-offs at leading names like Lucent, Hewlett Packard and SAP, but now the cracks are starting to show. JP Morgan spin-off Cygnifi’s closure of its collateral management unit and the postponement of an initial public offering by Canada’s Algorithmics are just two high-profile examples. Many other vendors are facing similar problems.

Gary Kemp, TT chief executive, said his firm needs to modify its business model to try and increase market share in its primary derivatives trading software product X-Trader. TT’s focus on core products mirrors Cygnifi’s decision to concentrate on pricing and valuation services, and appears to be the start of an industry-wide trend.

“TT is focusing exclusively on developing the next generation of sophisticated front-end trading applications for professional and semi-professional derivatives traders and brokers,” said Kemp. Its decision to close its head office in Evanston indicates that it is staying where its key clients are based, namely London, Chicago and New York.

As a result of the Frankfurt closure, TT president Andreas Preuss – a founding board member of Swiss/German exchange Eurex – will step down.