We have noticed six themes emerging out of the legal advice we give to the financial services technology sector:
- There is a greater scrutiny of contracts for all technology procurement. No longer is price the only important factor.
- There increase policing and auditing by software vendors and market data providers. A firm and factual but co-operative tone seems to yield the best working relationship in these awkward situations.
- Many clients are now reviewing their technology contracts to ensure that they comply with the FSA rules for outsourcing. We suspect this is arising because of greater back office outsourcing and rationalising.
- An increase in queries from quants and in-house programmers about the ways in which market data can be used. Generally the market data providers are incredibly rigid about the ways in which their data can be used as they want revenue for any other uses. We recommend legal advice for any out of scope uses.
- Some data centre providers are now being less flexible on deal terms than they previously might have been. We suspect this is because they want to streamline processes and squeeze profits through operational efficiency.
- Given the slight increase in fragmentation of multilateral trading facility providers, we have been recommending to clients that they scrutinise not only the deal terms, but the promises made in pre-sales meetings about the level of activity and liquidity available in the MTF.
For further information relating to any of the above issues or any other legal issue surrounding technology in the financial services sector please contact Brett Farrell.
