Do Canadian trading platforms need to be modernized for global purposes?

Is Canada falling behind on global trade?

In a world in the throws of the Digital Revolution, the only constant is change.

There are several major trade regulation changes coming in 2014, unprecedented in both number and magnitude.  These changes affect every company that imports into, or exports from, Canada or the U.S.  Some of these regulations require new licensing, and others mandate significant software updates.

Getting trade right is important not just for the economic growth it can create in Canada, but for the signal it sends to North America’s partners.  If North America fails to show leadership and surrenders the chance to be leading the way in the worlds most significant trade partnerships, others will step forward to fill the void. Now-a-days, thanks to the growing powers of Russia, India, Africa and Asia, that void would be filled within moments and be almost impossible to reclaim

Can Canada keep up in that face of all this competition?

P4Capital

Jim:  Over the last few years our trading software has grown stagnant. Oh sure,  the interface has gotten more colourful and interactive, but the core application hasn’t changed at all since it was bought. It’s like you bought a box with a pink ribbon on it. Eventually, the pink ribbon got tattered, so you but a shiny new yellow ribbon on it – but the repair was strictly cosmetic.  The box is still the same. The software that the Canadian banks bought is that box. It was purchased from the late 1980’s to the year 2000. They were able to do whatever they needed to do in those time-frames, but they’ve been lacking for anything new for the last 15 years. In other words, any changes have been strictly cosmetic.

Now you have “giants on the marketplace that were never there before, and those original trading platforms were never made to handle these new behemoths. So the question Canadian traders have to ask is am I happy making the money I’m making, or will these new competitors push me to the sidelines?”

Jeremy: The Canadian trade foundation was based on the 7.5 hour trading day. That model was based on the New York model. In Shanghai today however,  those building never go dark.

When 7.5 hours was the norm, when the ‘bell ends’ traders would take all the results of that day, sum them up, then batch send them to the accounting department. Everyday they would do the same thing and be told by the start of the next trade day how they were doing. Now there is no break in the day for batch updates;  you have to do it in real time. You don’t have an off hour to calculate – so your risk models are lacking.

Archana: The crash of 2010 is a constant reminder of the need and importance to bolster fall-back mechanisms – where the modern systems can apply a hard stop to free-falling stocks. Business is much more complex now than the antiquated systems that were built several years ago. As Jeremy said, stocks are trading 24/7. There is a race to gain supremacy, be it in terms of the overall market reach, or its impact. Not only that, but we are in the midst of a global economy where exchange is happening in multiple currencies. We need a sophisticated system that can counter faulty trades. For us to stay afloat in all of these emerging markets and to be counted as a viable player, our technology needs to be modernized.

P4Capital

What do you think?

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