Even if its multi-market trading and settlement system (MTSS) was a spectacular failure, Hong Kong-based Taifook Securities would score plenty of points for sheer ambition and dogged persistence. The project was rooted in what CIO Nelson Ying frankly admits was perhaps the worst time in the company's history, just after the SARS epidemic wreaked havoc on the economy, and while Hong Kong authorities were in the midst of tightening corporate governance standards. To add insult to injury, as was the case with other brokerages, banks were steadily biting into a larger share of Taifook's business. But many crises also give rise to opportunities, and this one was no exception. Hong Kong regulators were also extending trading hours for stocks and futures, and putting in place a single license regime that would eliminate the need for brokerages to set up separate businesses- and IT support infrastructure-for different financial products.
This presented Taifook with all the justification it needed to begin integrating its various trading platforms, to shave licensing fees, boost customer satisfaction, and win an MIS Asia IT Excellence Award for best IT governance project in the process.
Back to in-house
In the initial stages of its system makeover, Taifook was prepared to hand over responsibility for its core securities trading applications to external provider AFE Solutions, but the relatively high expense and limited flexibility of AFE's offering, as well as the difficulties associated with adding new features to it, soon persuaded the brokerage to bring the platform back in-house. Thankfully Taifook wasn't totally alone-a lengthy relationship with HP made it relatively easy to construct the system on the vendor's UNIX-based blade server hardware, buttressed by Oracle database and reporting tools and an EMC enterprise storage system that ensured the group met archiving and compliance requirements. The MTSS blueprint called for a system that would be powerful and scaleable enough to handle transactions in multiple currencies and languages, and a product range that spanned securities, derivatives, foreign exchange and commodities.
Taifook has come a long way towards reaching that goal. Customers can now connect, via phone or the internet, to a processor that exchanges information with a core trading platform that takes care of everything from order acknowledgement to credit checks and dealing, and is also tied directly to the Hong Kong Exchange. More recent additions include a derivatives trading mechanism fully integrated into the MTSS, and a new customer and corporate information solution that allows Taifook to unify and consistently update customer profiles.
The results of the new system, especially in productivity terms, were immediate and impressive. Orders now take about half as long to process as they did in the old days, and credit approvals are also a less painstaking process, helping meet the demands of customers who want to be able to trade at the same lightning-fast speeds of the market.
Taifook has also cut communications costs by reducing the number of notifications going out to clients when the status of orders changes. Most important, the various products on offer under the platform give customers the diversity they demand, while the service team has a single view of their clientele, regardless of how many accounts or products in which they trade.
Enter the matrix
Impressive as these gains are, they weren't what clinched Taifook an IT Excellence Award. The company's technological upgrade was accompanied by a governance overhaul that stands as a solid example of how business and IT can work together to advance strategies and control spending. Taifook developed its own "IT governance arrangements matrix" that ensured input and decisions on technology principles, architecture and investment were carefully balanced among IT, business, and service delivery groups.
At the heart of the matrix was a newly formed IT steering committee that included all the brokerage's top executives-including the CEO and financial controller-and has ultimate responsibility for the enterprise-wide IT budget. Under Taifook's unique and highly effective model, a "business monarchy" grounded solidly in the user community sets out basic IT principles and investment decisions, while the IT shop itself has more of a say on individual applications and solutions, and tracks spending on a project basis. The structure has neatly given every segment of the company a voice in technology initiatives and ensured business and IT move in lockstep. To the untrained eye it may look complex, but the matrix's relatively high level of detail also promotes transparency, making it obvious where the ultimate responsibility for projects lies and allowing executives to make quick and informed decisions.
On the spending front, Taifook has adopted a "portfolio management" approach to IT resources with which any stockbroker, worth their salt, would be familiar. This calls for investments to be subject to tough risk assessments, and monitored constantly so immediate action can be taken if they fail to perform or exceed time and budget limitations. At the project level, teams have to come up with arguments for individual spending initiatives that touch on issues such as scalability, vendor management, product pilots, and user training.
Obviously governance processes like these require a high degree of discipline, in at least some cases mounds of documentation, and may not be for the faint of heart. But they have helped Taifook survive and thrive in one of the region's most competitive marketplaces, with the brokerage consistently named, by customers and independent sources, as among the best of its class.
In the words of CIO Ying, good governance has blessed the firm with an infrastructure "shared" by IT and the employees who use it, and "evolving to meet the needs of the business."
Thanks to its steady oversight, the MTSS, a risky integration drive, successfully bundled the group's products and became the "glue" that holds Taifook together.
© Fairfax Business Media
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