What Economic Crash?
It was early September 2008 as I strolled into the office around 8:30am after a week’s break with my young family in Egypt. I was feeling relaxed, refreshed and oblivious to the impending economic crash in the financial world. Hoping to ease into the working day, I did not even reach my desk as my manager pulled me into a meeting room before I had a chance to even take off my coat. These kind of situations do not usually bode well for the individual where they could easily be marched straight back out of the office door never to be seen again. I had a feeling in this case that it was not my last day as a “senior analyst developer” but that something big was brewing and they needed my help.
My manager asked if I knew what was happening. I said “no”. “Have you seen the news?” I said “no”. There were rumours flying around that big financial institutions were in trouble and one of the biggest insurance firms with whom we did our Foreign Exchange (FX) prime broking was at risk.
FX & Prime Brokerage
At the time I was the expert on our middle office and STP systems having built or worked on many of them. I knew how the trading allocation worked for our clients, the messaging flow of our trades and I understood the clearing and settlement business. We were in a situation where we needed to move our FX positions which ran into 10’s of millions from one prime broker to a new one.
Traditional prime brokerage allowed us to trade FX for our clients but effectively under the prime broker’s name with whom we had collateral and credit agreements. The process is well explained on this site. The positions were held by the prime broker and effectively all the risk was with them. If they disappeared then the client’s money disappeared too.
Technology Scenarios – What If?
From a technology standpoint this scenario was never really thought about as we did not expect huge institutions to be at risk. We had business continuity processes where we could switch prime brokers if one was not available but we did not have a system in place where we had to move entire positions across and then have the STP (Straight Through Processing) systems seamlessly work with all clients notified of their positions. I recall feeling an element of panic as time was not on our side but also a tinge of excitement at solving a huge business problem.
Keeping Technology simple and focused
For all the documentation and configuration in the world this was not a time to be exploring and understanding our technology. The experts who had a deep understanding of the systems performed the analysis to identify the steps and the relevant system changes that were to be executed along with essential reporting for senior managers. As other parts of the business were operating as normal we needed to know the exact state of our middle office applications to ensure correct trade flow. Some would argue that we needed sophisticated dashboards or status screens but in our moment of need the Post It note came to the rescue.
These little yellow sticky squares of paper were our guide as to which mode our applications were in and where the trades flowed. We placed them just below the computer monitor from where all the action was taking place and diligently swapped them each time the configuration changed. During the following 24 hours, this manual mechanism was executed countless times until all positions were moved to a new Prime Broker. Pressure and tension was high but we had confidence in our systems and all the trade flows were being confirmed by our Operations team.
We prided ourselves in building generic, fast and resilient systems to cater for complex business needs but in this case we were brought back to basics by thinking simply and creatively and using all means necessary to achieve the business goal. The success lay with the quick thinking, accuracy and focus of the technology and business teams. Even though the period remains a dark cloud for finance, it was one of my most favourite times being a technologist within the financial world…