A Case Study Panel: T. Rowe Price and interop.io

T. Rowe Price and interop.io: Case Study Panel Recording

T. Rowe Price and interop.io: Case Study Panel Transcript

Dan Schleifer: Hello, everyone, thanks for joining us today at the A-Team Insights Buy And Build conference. Dan, can you introduce yourself?

Dan Green: Sure. I’m Dan Green from T. Rowe Price. I’m in our investment and trading solutions group. We’re essentially an internal consultant and change managers specifically focused on global trading.

I know trading is different across different shops, but our trading is quite broad. We have all the traders as well as all the order modelers, so the folks that are sitting between the PMs and execution, cash management, FX, ETF management, SMS. It’s quite a broad trading group in that sense.

Dan Schleifer: I’m Dan Schleifer, cofounder and president of interop.io. We were formed about 15 months ago out of the merger of Glue42 and my firm, Finsemble, and are now the largest and leading provider of interoperability in capital markets. We’re thrilled to have Dan as a customer.

To start to dive into interoperability – when you came to interop.io, what were some of the business challenges you were looking to solve?

Dan Green: So, our journey with interoperability began in 2019 with me and our international head of equity trading alongside some of our equity traders. We started spit balling.

What would a perfect workstation look like for an equity trader? What would perfection be for our workflow? I’ve always thought the screen setup is a symptom of a problem. It looks ridiculous. I remember one asset manager in Germany, someone had twelve screens, which is punching for some record that shouldn’t be punched. I don’t understand it.

This is not a dig at our tech partners, but we left tech out of that conversation because we didn’t want anyone on the technology side cringing at the fact that we were essentially designing vaporware. But we wanted to say, if there were no technology or data limitations, what would your perfect workstation look like, and what would you get out of this?

So, we started sketching this out, essentially designing the perfect equity trader workstation designed by the traders themselves. Then we started to approach technology with our pretty drawings, saying this is what we’d like to do. The hardest part of any of these projects, particularly on the interoperability side is getting the buy-in. We had these drawings, but we didn’t have much else. We became aware of interoperability through this journey and through working with our tech partners and working with interop.io.

If I saw this sketch five years ago as a management consultant independently advising a client, I would say this will take you five years minimum to build this monolith system, and you might not even get the outcomes you want. As we’ll see today, we had a very different experience with taking that design and turning it into something realistic.

How to get interoperability buy-in?

Dan Schleifer: As far as buy-in, earlier we took a poll where everybody in the crowd confirmed they were aware of interoperability. But 56% percent said “other priorities” was why they have not implemented it yet. What were some of your challenges along the way of getting buy in, budget, and technical resources to get the project going? How do you make your perfect vision more than “nice-to-have?”

Dan Green: The reality is it’s not easy. What made it a little easier was that I was patient, number one. You must be patient and build slowly in terms of gaining momentum internally. Additionally, we had traders who were quite engaged. I was fortunate that I had a small group of equity traders who really leaned in on this.

In terms of the overall buy-in for the project, honestly, it was just biding my time having the piece ready. I could keep the momentum going forward with the diagrams and people talking about it on the trading desk. We hired an external firm to come in and do a UI/UX prototype, and that was a positive experience because we could show people what this could be like. We showed the prototype to a lot of people across equity trading, but we also shopped it around to different areas of trading so they could see and opine, and that helped on the management conversation.

Ultimately, the battle for what we were trying to achieve here was to take something from a nice-to-have from a management perspective and turn it into a need-to-have.

Dan Schleifer: A good takeaway is being able to get (and we’ve seen this consistently across customers) some sort of prototype — whether it is literally built in PowerPoint or it’s real code or anything in between. Get a prototype that you can put in front of people that has the applications that they are used to on the screen. We spend a lot of time working with customers to do a proof of concept, so they have a few of their own real applications up and running in an interoperable environment. Being able to see — and, again, sometimes a PowerPoint wireframe is enough — what would happen between their own applications is invaluable.

Curious about, one other aspect of kind of prioritization. Oftentimes, we hear from people, well, we can’t do this until this other project is done. Our more successful customers understand interoperability as a framework that will allow other projects to move faster. I always use the LEGO analogy. Interoperability is the LEGO base plate that gives you the necessary foundation to build stuff off of.

Dan Green: It’s a bit different for us because most of the momentum building for this was before we were even talking about interoperability. The reality was we were still talking around this is the pretty design. We knew we wanted to make it happen.

The way we went about this is absolutely not the way I would go about it now, but it’s absolutely the way I had to go about it to make it happen.

And in the context of I would have done it widget by widget with a clear agile delivery plan. We’ll do this, and it adds this value to the desk. Pop that widget up, and you build it out piece by piece. We went huge because unless we were delivering something to truly transform workflows, it wasn’t going to happen. It would have just been these individual widgets languishing on the business prioritization lists.

The interoperability project vision

Dan Schleifer: We’ll wrap up with a 20/20 hindsight theme, but first, let’s focus on the vision.

Dan shares a slide of product, Agora, and discusses the different components and how they work together.

Dan Green: First off, what it is and what it isn’t in our workflow. It is not intended to be a replacement for our EMS. It’s not intended to be a replacement for our OMS. This is about putting the equity trader in the driver’s seat, getting all the information they need from various third-party applications, internal legacy systems, news sources, notifications, and bringing that all into a centralized workstation where it’s consistent, and it is driven by the processes and workflow they want to follow.

The other thing I’ll flag is 2019 is when we started designing this thing, and it’s not finished yet, as there are other pieces being built. I want to express to the group that we didn’t start building this until the start of this year (2024).

The actual build and connectivity part that interop.io helps support was around four or five months. And, you know, I’ve had many years of transformation experience. I can’t believe how quickly they did this.

If it’s not become apparent yet, I’m on the business side. I’m not a technologist. We have Nick over here for any tech questions, but I’m still stunned how quickly they were able to do this and bring this to life.

A quick thing I’ll mention is that the provider of our pre-trade TCA widget was a vendor who was already FDC3 compliant. It was one of our first experiences with building this trading workstation, and because they were already FDC3 compliant, it took them, like, two days to implement that into the space and have it contextually understand the ticker.

Previously, traders aren’t using this tool because they don’t want to manually enter it every time they stage an order. Now it’s there. They want it. It pops up straight away. It understands what the order is. The reason I flagged this case is from a change in strategy perspective. If we have that network effect of vendors of going through the FDC3 process and being compliant, I don’t need to do an RFP and sit through hours and hours of pitches when I’m looking at a market data source. I can just take it, trial it for a few weeks, drop it on the trader’s desktop.

A prime example of fixed income now, I’m sure some of you are involved in CTP conversations as there’s a lot of products in the market. We can take those — and we’ve done this with our EMS on the fixed income side — and instead of spending hours and filling out tons of RFP documents, just give it a go. Let’s drop it in the traders’ workspace. Let’s have it integrated, and let’s give it a trial run. To the comments earlier today about how this kind of micro application of fully integrated development model leading to the best-in-class-solutions being the ones that rise to the top…I completely agree with that.

You don’t have those implementation considerations around not making the switch because it will take six to nine months.

Dan Schleifer: A lot of what you showed us are components you built yourself, along with third-party. Mixing and matching and the theme of the day — the building and the buying. Obviously, you bought the interop technology from us, and you built the components that are in here. The thing I often hear from clients is how in general it’s hard to try out new technologies and if it isn’t integrating in, people don’t adopt it. Have you had these sorts of challenges with vendors and driving adoption of technology?

How FDC3 can jumpstart your app’s adoption

Dan Green: On the vendor side of things, going the interop path has made the commercials easier than expected because there hasn’t been necessarily a shocking sticker price or even a sticker price in most of the operations. On the other side of it, it’s clear that it’s still new technology to that.

Bringing it back to that fixed income example I brought up before, we have a lot of startups that are all trying to win the race to be the CTP in the fixed income market before EMEA build their own, which could be years and years.

It’s interesting that of the three or four vendors I’ve seen in that space, three of them are FDC3 compliant. The newer startups that are trying to fill gaps in the market are understanding that one of the core values they can offer (especially for firms like us that are already interop.io clients) is an ability to integrate quickly because it is a core component.

One of the reasons this struggle to get up the mountain top to implementation was the fact that everybody looked at it and went, that’s three to five years. But if you have vendors coming through the door that you want to explore that have FDC3, I can start tooling around with straight away and have the traders playing with it. They’re going to get to the front of the queue.

I think that message is permeating with new vendors coming through, and we’re seeing that with more established vendors — clients such as ourselves are helping to move towards that adoption. And I think the credit goes to interop.io for encouraging some of the more established players to make their products FDC3 compliant, because it’s a positive for everyone involved if your product’s good. If your product’s rubbish, well then.

Dan Schleifer: It makes it easily replaceable. You can pull out that LEGO brick too.

But I agree, FDC3 is a big part of what we do, and we don’t charge the vendors to do it. Part of our job is to get a bunch of our clients to request it once, so vendors recognize that this is actually a thing. They hear from one customer; they don’t do it. They hear from five or ten, suddenly they realize they need to do it.

Now, I haven’t asked you this question before, but I’ll ask you to be brutally honest. How’s the experience been working with us, working with the FDC3 community, working with the technology? Have we been a good partner to you?

Partnership for successful interoperability

Dan Green: I probably wouldn’t be on the stage If it hadn’t been a good partnership.

The partnership’s been very good, and I think my tech side would agree. It’s been a very refreshing experience to have genuinely responsive support, but also solutioning in that regards. On the business side of things, you know, the team’s been great at helping us think about what’s next. This is all equity trading today, but my remit is not just equity trading. I’m going to be taking this to fixed income, taking to FX, to our order modeling functions. I’m in fact on a bit of a PT Barnum kind of tour at the moment. I firmly believe that every business unit leader has an Agora in their back pocket, but they’ve never either dusted it off or they’ve never got it off the ground because it’s three to five year’s worth of work.

Dan Schleifer: It’s too daunting.

Dan Green: Yeah, and when I have the conversations with people outside of trading, you can see their eyes widen as they think about, okay. This could really transform my workflow. And from my perspective, selfishly, that’s great because if you do all of that when I need to connect into your business unit, when my workflow touches you, your core applications, all of that’s already been done for me.

Dan Schleifer: What’s been the feedback that you’ve received from traders, from investment managers, from people that are either getting this rolled out to them now or that you’re going and kind of cross-pollinating and shopping? What do people think?

Dan Green: So some of the traders are in a pilot group using this at the moment. Their feedback’s been really good, but that makes sense. They’ve been iteratively contributing to this for quite a long time. The global rollout for all equity traders will come a little bit later in the year. The feedback when we show people and we demo it is exceptionally strong.

I wasn’t trying to force the traders to do this. They were driving this for the most part themselves. They wanted this. I think we’re going to see bigger challenges, fixed income in particular, in other areas where people are very entrenched in what they do, and I’ve always done it that way. Why would I need to do this? Those challenges, I think, are just going to have to be met with showing them the efficiencies we can prove out in the equity trading workflows and kind of learn by showing.

In conclusion

Dan Schleifer: What is the vision that you have for taking this forward? And you’ve touched on rolling out to different groups, but rubber’s hitting the road. Given the hindsight being 20/20, what would your advice be to people if they want to give this a try?

Dan Green: As we look at fixed income and in particular, our modeling group, and we start to think about how we can build this Agora for them. If you take the models, for example, they sit between the traders and PMs. They’re in the worst of both worlds. They’re having to draft both sets of applications, data, etc.

Our approach with them and really our next steps with them and fixed income is to focus on a small problem that you can solve in the current architecture. To your analogy around LEGO bricks: put the first block down, put the second block down, and with each of those blocks, you prove out the value. You get rolling momentum, make it targeted, and make sure it’s something someone is going to use.

If you start to get the feeling, they might not use this. Maybe pull back from that widget because you need to keep that momentum and that positivity going. Focus on that targeted delivery model, the financing model side of things could be stronger, let’s help you on the baby steps on this.

Dan Schleifer: I think it’s solid advice, and I’ll echo that that’s what we hear from our customers. Some have gone for the big bang, thinking they must boil the ocean because that’s the only way to get a project approved.

Other people have taken the incremental approach. Once you have the base plate in place, you can start swapping out the LEGO bricks. I’m sure your team has seen that the front office has, to some degree, lost faith in IT to deliver, because no matter what they ask for, they’re told it’ll take six to eighteen months and cost a million dollars. You want that button to be purple? We’ll put a Jira ticket in, and we’ll see, but we’ve got other projects.

Being able to have this loosely coupled framework where you can roll out small widgets and make small changes to workflows in an agile way helps to rebuild the relationship between IT and the business, because you can continuously iterate. That iterative bit not only makes the technology work, but can bring the faith back between the IT team and the business.

Thank you for chatting today.

Dan Green: Thank you, Dan.

Further Reading

Unlocking Innovation in Financial Services with Interoperability