The Situation

A wave of new electronic exchanges triggered vicious price competition. SecuritiesCo*, a leading electronic exchange, had recently acquired its primary competitor and needed to integrate the two technology infrastructures. At the same time, SecuritiesCo was under significant pressure to reduce costs, with customer interfaces accounting for ~30% of technology costs. We were asked to advise on the following issues:

• How should it integrate two disparate technology infrastructures?
• How should it restructure the organization to best compete in a consolidating industry environment?

Our Approach

Our team set up two primary work streams: strategy and technology.

Our Recommendations

We recommended the following solutions to create the right technology architecture:

• Front-end customer interfaces to be fully replaced with a new architecture that is in line with business needs and capabilities.
• Back-end systems to be consolidated utilizing the best components of SecuritiesCo and its acquisition.
• Matching engines to be integrated into a single system to support a single quote and to optimize speed and functionality.

We recommended an aggressive transformation plan to support organizational alignment along businesses, while maintaining trading synergies: Two businesses, Agency Brokerage and Exchange, to maintain separate business organizations while sharing certain technology platforms.

The Results

• Redesigned technology platform allowed SecuritiesCo to realize 50% cost savings
• Organization restructured around value added broker, exchange and technology
• 100% increase in market value
  • Stock price doubled over case period