Internal Marketplace: A Concept Brief 
Executive Summary
THE OPPORTUNITY STATEMENT
Participants in the securities industry, especially the larger investment banks and brokerage houses who have traditionally routed orders to various external destinations for execution, are now looking to extract value out of this order flow. Many of these organizations have grown through acquisitions in the recent past, and have therefore inherited disparate business practices and systems, which have resulted in fragmentation of liquidity. Time differences between their offices across the globe add to this fragmentation. They are now looking for ways to consolidate liquidity across the organization. In addition to this, investment banks that deal in OTC derivatives have a need for an integrated software system to handle this growing business and manage their exposures in this segment. Finally, the buy-side institutions are becoming more demanding on costs and there is pressure to reduce the overall cost of trading, clearing and settlement.
THE SOLUTION
Having perceived the need in these organizations to extract value from order flow, consolidate liquidity across the organization, manage their OTC derivatives business efficiently and minimize cost of trading as well as cost of clearing and settlement through internal efficiencies, Headstrong has conceptualized a solution to create internal efficiencies by the provision of Internal Marketplaces in these sell side organizations. The solution is based primarily on Headstrong’s flagship product, STRIDE and other software products and components that are already owned by Headstrong. The internal marketplace solution from Headstrong, consists of three major building blocks:
- A trading system for internal matching and concentration of liquidity
- A distribution system for deal capture and distribution of financial products
- A clearing and settlement system
ABOUT THIS CONCEPT PAPER
This concept paper seeks to first put the solution in perspective by setting the context and explaining the concept. Later sections bring out the goals, the value proposition and the business benefits of the internal marketplace solution. It concludes with a brief description of the solution offering from Headstrong.
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