The whole topic of single-dealer systems seems to get lost in only talk of new regulations. There are many reasons why broker-dealers want and need a single platform to demonstrate their wares to clients and potential clients.
Many of those reasons are as old as the hills; to have a salesforce speaking one-language, to distribute research, andh to share complex trade ideas with analytical support to back them up.
Live executable prices are a relatively new part of the jigsaw. The justification for single-dealer builds has always been a portfolio of different interests which has led to much of the difficulty of getting these efforts to market.
And whilst some of the new regulations detract from the desire for single-dealer trading platforms a few new trends actually enhance the need for them.
Two that spring to mind are:
1. The complexities and speed of movement around OTC derivatives and being able to inform a client of the full economic consequences of the next trade given all considerations like margin, collateral, clearing fees, cross product margin offset or not, etc etc – all at point of sale before a trade is “closed/clicked”. No easy task and one made much more complicated if needing to operate through third party networks restricted in terms of the number and amount of data they can stream in realtime.
2. Best expressed by the views of an equity colleague commenting on the introduction of MIFID1 – where they didn’t understand the opportunitiesthat lay before them to adhere to the letter of the rules whilst still being able to service business flows that in time migrated to official “dark pools” but when such official dark pools didn’t yet exists in any size or scale. So those firms that were able to “seize the moment” were those who had their own capability because:
(a) they had the capability and
(b) because they’d organised the necessary flexibility in surrounding systems of which an external single dealer client offering is but the tip of a very large system, process and human endeavour…
An endeavour best started months before the need is upon you or is indeed clear from regulations! I hope that contributes to the debate.