FTF News got time with Brian Collings, CEO for Torstone Technology, to talk about post-trade system fragmentation and Torstone’s win as the Best Clearing and Settlement Solution award via the FTF News Technology Innovation Awards.
(The middle and back offices of financial services firms are populated by “disparate, poorly integrated legacy systems” that are in place to manage operations, says Brian Collings, CEO for Torstone Technology, which won the Best Clearing and Settlement Solution award via the FTF News Technology Innovation Awards for 2018. “This fragmentation hinders the post-trade workflow, making it difficult to access crucial information exactly where and when it’s needed.” As one of the founders of Torstone, Collings led the management buy-out of the securities and derivatives post-trade processing technology from KBC Financial Products, where he served as chief information officer for a decade and later as chief operating officer (COO). In his role at Torstone, he has expanded the company’s global coverage via a Singapore office that opened in 2013 and a Tokyo office launched in 2016. Before his time at KBC, Collings worked for the hedge fund D.E. Shaw as head of the non-US technology. FTF News recently interviewed Collings to explore the fragmentation issue and related matters in depth.)
Q: What would you say is the single, biggest reason for the market’s rapid embrace of Torstone Technology’s next-generation Inferno offering in 2017?
A: Historically, the post-trade environment has suffered from a lack of investment in technology, compared to other parts of the capital markets value chain.
The result is a prevalence of disparate, poorly integrated legacy systems to manage middle- and back-office processes.
This fragmentation hinders the post-trade workflow, making it difficult to access crucial information exactly where and when it’s needed. In today’s market, a flexible and agile approach has become essential to keep up with the fast pace of business change. Underpinning this is the need for an operational platform able to adapt easily as the markets continue to evolve.
That’s where Torstone’s comes in as we simplify the complexities of post-trade by connecting global financial industry expertise with post-trade technology innovation.
Our modern service-oriented architecture offers clients a scalable and flexible platform which enables increased automation that means a flexible transformation layer and data model can configure Inferno to customer needs. It also allows greater control for the finance and operations team to get a consolidated view of all transactions data.
Q: Why did Torstone make Inferno a cloud-based platform for securities and derivatives clearing and settlement?
A: Torstone Inferno was originally built by and for a global investment bank.
At the core of its design is the ability to flex to new requirements. Our customers can manage the entire cross-asset, post-trade workflow — trade capture and confirmation, settlement and accounting, through to reconciliation — all on a single, integrated platform.
We made Inferno a cloud-based platform because it allows our customers to be more efficient, reduce operational costs, and get products to market faster than ever before. They can focus on their post-trade workflow with complete assurance that their business-critical systems are up and running, continually supporting their business.
Q: What are the optimal operating models for post-trade processing that Torstone wants the industry to move toward?
A: Every customer has unique and varying requirements, so it is hard to define an optimal operating model in the world of post-trade processing.
That being said, we offer an industry-standard platform with a huge degree of commonality and standards, and the cost of those can be mutualized across our entire customer base.
Any customization above the standard platform can be achieved using the configurable setup that enables clients to tailor the system to their requirements without the need for a code release.
Q: Why is it important for Torstone to invest $150 million in R&D?
A: So far, we’ve invested over $150 million in R&D.
We are committed to delivering the best post-trade solutions available, and part of that is to continue investing and enhancing Inferno.
Our aim is to keep Inferno future-proof by continually developing and delivering new technology innovations.
Q: What have been the results from the ongoing investment in the Inferno system?
A: Some of the results of our ongoing investment in Torstone Inferno include: a single integrated platform, which makes it easier and quicker for clients to initiate and manage changes across their workflow; a built-in configurable rules engine and flexible configuration layer for optimal customization; and monthly releases that eliminate the need for expensive upgrades, patch releases, and legacy code.
Q: How does Torstone deal with clients that still use manual workarounds and manual systems?
A: Inferno is available as a fully integrated middle- and back-office platform, or as individual modules to suit your needs.
It is flexible enough to support any market or asset class, so clients can deploy it locally in any region or globally across their entire business. Any repetitive manual processes can be swiftly automated with our flexible configuration layer. By helping our customers save time managing their back-end processes, they’ll have more resources to service their customers and pass on additional benefits and savings.
Q: What disruptive technologies excite you and why?
A: Big Data and artificial intelligence (AI) are the two key technologies that will have a huge impact on the post-trade industry.
As an example, using a cloud-based big data framework, Torstone helped bring the latest regulatory and legal ledger reporting to the Japanese market, providing our clients with scalable, flexible solutions concerning transaction volume, data location, and multiple asset class coverage.
From an AI perspective, Torstone Inferno is an open platform. The data quality in our system is extremely high because it is the books and records of the customer, and therefore it is completely reconciled.
Using AI technology in conjunction with rich, high-quality data forms a powerful combination in terms of improving operating efficiency and post-trade analytics for analysing transactional data.
Q: What major clearing and settlement trends will impact Torstone’s strategic direction for the rest of 2018 and beyond?
A: Regulatory changes like SFTR [securities financing transactions regulation] and CSDR [central securities depositories regulation] are going to have a massive impact on the industry as did MiFID II; that isn’t going to end any time soon.
Up until now, many sell-side firms have taken a “sticking plaster” approach. In the future, firms may need to make major upgrades to comply with these regulatory changes.
There is also a lot of talk about DLT [distributed ledger technology] and the blockchain — we’re keeping an eye on the potential impacts of DLT.
Blockchain technology may create more venues, so banks and brokers will need more connectivity.
That means old and new coexisting with the same processes. Hopefully, the data quality from these initiatives will reduce the reconciliation burden going forward.
But for banks and brokers in the operations area, there is going to be much more impact from machine learning, artificial learning and even general robotics. A recent Mckinsey’s research report stated that 50% of cost savings could be made by purely upgrading your back-office operations into modern cloud-based back-office platforms, and that automation will give sell-side firms the biggest bang for their buck.
Some other back-office game changers we see on the horizon include the big market changes coming to the Hong Kong Stock Exchange with their initiative, Next Gen, and the Australian stock exchange looking at a CHESS replacement.
We are always looking for operational efficiencies to help our customers reduce their costs while maintaining regulatory compliance.
If you’d like more information on how Torstone Inferno can work for your business, please get in touch.
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