Most in-house settlement systems give little or no competitive edge and projects to develop them often have to be written off because they overrun their allocated budget and time. City Consultants says that because of the high costs of retaining computer staff, at least pounds 100m has been written off in the last six years and the figure could be much higher.
Individual projects can cost anything from pounds 20,000 to pounds 20m depending on the size of the firm, and can require dozens of computer staff. But increasing competition among computer firms means that brokers can get bargains if they look to outside suppliers instead. The market leaders in the UK currently include ACT and NMW.
Stephen Pinner, a spokesman for the consultancy, said that at the time of Big Bang, stockbrokers thought that computer experts would not understand the world of finance. 'They discovered instead that they do not understand the world of computers. The message is to stick to the business you know,' he said.
The report also concludes that some stockbrokers are technologically ill-prepared for Taurus, the delayed Stock Exchange settlement system that will replace share certificates with electronic information. It warns there could be a last-minute panic similar to that seen just before Big Bang.
'The natural resistance to change is augmented by uncertainty surrounding Taurus. Many brokers are postponing any further settlement system changes until after Taurus is implemented,' it says. Taurus is scheduled to be in place by the summer of 1993.Reuse content