FIS looks to evolve derivatives post-trade utility

Wedbush Futures follows Barclays and Credit Suisse in outsourcing their post-trade operations to the utility.
By Joe Parsons

Trading technology vendor FIS is aiming to evolve its back-and middle-office derivatives utility to offer a more componentised service as it seeks to widen its client base.

FIS recently announced non-bank derivatives broker Wedbush Futures has signed up to the utility, in which it will outsource its listed derivatives clearing operations and technology to the utility. 

Wedbush follows Barclays and Credit Suisse in outsourcing their post-trade operations to the utility in 2015 and 2016 respectively.

John Avery, director of client and industry engagement for the FIS Derivatives Utility, told Global Custodian that now it has onboarded its third client, it will look beyond a ‘one-size-fits-all’ model for other banks and trading firms looking to outsource their middle-and back-office.

“In 2018 we are going to be rolling out a more componentised approach, for example back-office as-a- service, or reconciliation-as-a-service,” said Avery.

“If a client does not want to move the middle-office to the utility, for example, there are other options. We want to make sure we can offer out the benefits of a managed service to clients that only want a sub-set of the full range of services.”

A recent study by Oliver Wyman predicted between €500-700 million will be spent on outsourcing back-office functions for listed derivatives, securities and FX. However, it suggested middle-office outsourcing is less likely to be adopted by firms as “some banks find it difficult to segregate tasks from the front-office.”

Since taking on the back-office of Barclays and Credit Suisse, Avery said the business has onboarded a team of 550 staff across nine cities, and is the process of standardising its outsourcing technology for clients. However, he added no staff from Wedbush will join FIS as part of the outsourcing deal.

“Our goal is to incur minimum headcount as a solution – instead it is technology that is the driving force to create scale and efficiencies,” he said.

Avery also noted that FIS is set to roll out its new real-time cleared derivatives technology throughout the year, which will be applied to its utility clients.