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CRTM
Ecosystem
Overview
This page
provides commentary on where things are at now and where they are likely
heading in the future for the Ecosystem of CTRM functionality.
We use the
term ‘NewCTRM’ to describe an idealized
CTRM system of the future. Elements of
our ‘NewCTRM’ may exist in some form
in some vendor-supplied or open source systems of today.
Outline
1) App Store Model, Vision for CTRM
2) App Store Model For NewCTRM
5) Non-CTRM Real World Examples
1) App Store Model,
Vision for CTRM
Have a look at
the example in the diagram below, commentary to follow.
Diagram 1
Example of Third
Party Application for CTRM
Commentary
1.1) The above
diagram represents a model for some software product or offering (e.g., web
service) that could be created and sold as part of the CTRM Ecosystem, to be
used by a firm. We’ll assume that either
the firm is using software from a CTRM vendor, or maybe using their own
custom-built in house software.
1.2) To
interpret the information in the above diagram, we are proposing a solution be
viewed as having 4 parts:
Part 1) This
is the third party solution. Such as a
Data Warehouse, PnL Explained, etc.
Part 2) What
is labeled as ‘System Agnostic Staging Area’ is a conceptual in nature. This would from a software point of view be
part of the third party solution. What
this represents is getting data to a point where the format is of an
industry-standard nature. To allow for
data to be interchanged. This solves the
intellectual property issue, since the standard format would be something
openly available.
Part 3) What
is labeled as ‘Adapter Layer’ would be something that goes from the ‘System
Agnostic Staging Area’ to communicate with the vendor solutions. The above diagram imagines several different
‘Adapters’ in existence, i.e., 3 are shown as an example, and the example firm
only using/needing the adapter to Vendor 1.
Because this communicates with a CTRM system, this would need to be
build out by either the CTRM vendor or by an authorized system integrator.
Part 4) This
is the CTRM system, e.g., as supplied by a vendor.
1.3) The idea
is that the Third Party Application is something that a CTRM system doesn’t do,
or doesn’t do well.
1.4) As an example
from the non-CTRM world, Microsoft Windows comes with a picture editing program
called ‘Paint’ or ‘MSPaint’. It is good
for light editing. And it is free, i.e.,
included with Windows. However, it is no
competition for a third party software package such as Adobe Photoshop.
1.5) People
have options. If the included MSPaint is
good enough for them, they can use it, or they can use something else.
1.6) In the
world of CTRM, it is hard for a firm to build out something similar, i.e., in
the case that a CTRM system is missing some functionality or has some
functionality that is only at the basic level.
Or, rather, a firm can build out something better for one particular
client. And, indeed that is the way of
things where they stand now. If a firm
requires more than what a CTRM package offers, they will pay to get additional
functionality written for them, e.g., pay a system integrator.
1.7) The
problem that we are looking to solve here is one of repetition. Suppose a system integrator does built out
something new and something that they think many firms would be interested in
using, they typically can’t resell it do to the various restrictions on
intellectual property, etc. It should go
without saying, yet we’ll say anyway, that we are in favor of the restrictions
on sharing intellectual property are valid and should be respected.
1.8) So the
same solution, e.g., data warehouse, PnL Explained report, risk reporting,
exchange feeds, tend to be build out again and again for each new client
implementation. While this is good news
for the system integrators, this model can be improved upon from the point of
view of CTRM-using firms.
2) App Store Model For NewCTRM
For the
diagram below, Diagram 2, we modified it to show how things would work, i.e.,
are proposed to work for NewCTRM. See the commentary that follows.
Diagram 2
Example of Third
Party Application with NewCTRM
Commentary
2.1) The above
diagram is meant to start with the previous diagram and adjust/modify it for
the way we envision NewCTRM to work.
2.2) Notice it
is simpler than the prior one. Just
three boxes.
2.3) And why
is that? The native format for the NewCTRM will be the open standards for
data interchange (e.g., trades, etc.).
So for NewCTRM, there will be
no need for a system-specific adapter.
2.4) I.e.,
Third party firms can build out their applications (traditional, web service, etc.)
or ‘Add-ins’ just once to the standards as indicated above in the ‘System
Agnostic Staging Area’ box. This is
somewhat conceptual in the sense of showing two separate boxes. The reality of the third party software is
that the 2 boxes on the left are really just part of one system.
2.5) To
clarify, we are not talking about things being one way or the other. Meaning, we are thinking that the third party
firm would build out their application (module, web service, add-in, etc.) just
once and that it would work with NewCTRM
*and* traditional CTRM vendor systems.
The important part is, that it would not need any special adapter to
work with NewCTRM. That is how it would work naturally.
2.6) The
adapters would then be created, where appropriate so that the third party app
would work with the traditional CTRM vendor systems. It is envisioned that at some point in the
futures, the traditional CTRM vendor systems will update to the industry
standards, so as to support things with no special adapter needed.
2.7) In my
mind, this is like the early days of cell phones, where each model had a
different and incompatible shaped power adapter. Where in the future, everything will use
‘USB-C’.
CTRM Today For Third Party Apps
Image 1
3.1) While we
have been saying above ‘Add-in/Application’, the two concepts are somewhat
distinct.
3.2) For an
‘Add-in’, we are thinking of something that works somewhat seamlessly within an
application. E.g., something that adds a
new menu item, a screen or screens, etc.
3.3) This is a
common occurrence for open source software, e.g., where additional ‘add-ins’
can be added to enhance functionality.
3.4) This is
something that will be part of the NewCTRM
framework, which is something that may be a differentiator from traditional
CTRM systems.
3.5) Not
everything that has Add-in capability is necessarily open source. For example, Microsoft Excel supports third
party Add-Ins.
Here is a list
things that a third party company may want to offer as software/services, to
supplement an existing CTRM system, or to replace some basic feature with
something better.
4.1) Data
Warehouse. Many firms will write their
own data warehouse solution, i.e., repetition.
A data warehouse would contain many days of reporting information/data,
which is often not suitable to keep in a CTRM, which typically works best only
handling active production data.
4.2) PnL
Explained. Profit and Loss Explained
reporting (a.k.a., ‘PnL Attribution’).
This is something where CTRM systems may have some offering (like
MSPaint) that works OK for some clients, and where others have had to
historically build their own solutions to get better functionality.
4.3) Exchange
feeds.
4.4)
Interfaces to electronic confirmation services
4.5) Market
Risk reporting. Even systems that have
strengths in market risk calculation sometimes have less of a relative strength
in terms of reports.
4.6)
Regulatory requirement reporting, e.g., Dodd Frank, MiFID, etc. This makes for an interesting example. Why?
This is something that, for sure, firms need. E.g., if a firm trades derivatives in the US,
they may need to report them to a SDR (swap data repository). The requirements for regulatory reporting can
change more quickly than CTRM upgrade cycles.
Also, for a firm that creates ‘CTRM’ software, expertise may be strong
in terms of trading and risk management, but not all vendors will be equally as
strong in terms of regulatory requirements.
So there may be a future opportunity for a specialist firm to create a
‘best of breed’ solution and it is our goal to help create a CTRM ‘app store’
and/or app ecosystem that will allow that to happen.
5) Non-CTRM Real World
Examples
Example from
Microsoft’s App Store Marketplace.
https://appsource.microsoft.com
This shows a
search for Salesforce. E.g., one of many
add-ins available for Microsoft Outlook. This screen shot is meant to just
demonstrate the idea of an ‘app store’ in general, which your humble blogger
may correctly assume that you, gentle reader, are already familiar with. To help get you thinking about how this
might be applied to CTRM.
Image 2
Introduction to
CTRM
Click on this
link for a great introduction to CTRM software: Introduction to CTRM Software