Key considerations for moving from TDM to SIP-based Private Wire trading communications

Modern trading communications technology is becoming essential in the fast-moving financial services industry.  While organisations have relied on legacy Time-Division Multiplexing (TDM) technology for decades, these systems are approaching end-of-life and no longer offer the capabilities traders need to compete.

TDM is based on fixed line infrastructure, making it difficult to extend to modern hybrid working environments. That’s why the industry is quickly moving towards Session Initiation Protocol (SIP)-based trading communications, as it uses the internet and Voice over IP (VOIP) to connect traders all over the world, whether in offices or at home.

Research shows the global SIP trunking market is expected to grow from $13.03 billion in 2021, to $14.75 billion in 2022, as businesses continue to adapt to new ways of working following COVID-19.

For the financial sector, moving to SIP has the potential to drive major value across the board. Although specific priorities and benefits will differ depending how your organisation uses private wires and hoots, as well as your overall maturity level.

Here are some core considerations for making the switch from TDM to SIP, based on three segments of the financial services industry.

Banks

Large banks are in a phase of transition, driven by the cloud and catalysed by COVID-19. Some are further along in their digital transformation journey and will have already adopted SIP turrets, while others still heavily rely on TDM.

Banks that are yet to upgrade to SIP are at a disadvantage compared to rivals. The first step is to start creating a stable, compliant hybrid environment and set out a comprehensive plan for moving to global SIP connectivity.

As Migration is a complex process, it’s best to use a phased approach. Systems and partners that offer interoperability between UC, SIP, and TDM platforms will ensure stability and compliance throughout the transition. 

For banks that have already implemented some SIP turrets, the next move is to scale these investments to your global operations.

Most banks will still have end-of-life TDM tech in their global telephony networks, relying on gateways to convert TDM to SIP so their SIP endpoints can connect to the TDM private wires and hoots. These institutions must execute a smooth migration to SIP for internal hoots and client counterparty lines, as it will eliminate the need for gateways and allows native SIP connectivity.

Buy side investment firms

Buy side organisations – including fund managers and insurance companies – don’t use private wires as much as brokers or banks, with far greater use of IM facilities. That makes their choice of SIP platform extremely important, as it will need to seamlessly integrate with their UC systems and cloud platforms.

Buy side firms are still transitioning to remote working. While most fund managers will attend the main office when updating portfolios, they need to have the flexibility to work effectively in different scenarios.

That requires a platform with exceptional user experience for permanent secondary sites and home offices, with the ability and available bandwidth to scale at will and offer a full trading experience anywhere.

Brokers

There are a variety of different broker businesses, each with different needs depending on their size and segment.

For instance, global interdealer brokers are heavy private wire users and have a big focus on external counterparty communications. Similar to large banks, these organisations often face significant upgrades, facing challenges related to large TDM footprints and integrating their communications infrastructure with various cloud platforms.

Meanwhile, regional or smaller brokers typically face more manageable upgrades. Although they’re more sensitive to cost pressures and are rightly cautious when investing in new technologies.

Smaller brokers often choose to sweat technology assets or buy used equipment. They’ll need to execute a SIP transition that makes it easier to maintain legacy equipment and manage mixed technology portfolios by integrating systems.

Powering differentiation with SIP and TVSC

While every organisation will use SIP differently, every financial enterprise stands to gain value from this more advanced and feature-rich platform. There are many common advantages and considerations that cut across multiple sectors, demonstrating that all organisations should be looking to transition from TDM to SIP-first private wire and hoot connectivity.

Through Trader Voice SIP Connect (TVSC), Telstra works with your organisation to identify the best, most cost-effective SIP implementation that works for your business needs. Financial institutions need only select their private wire port requirements based on their call flow and trader connectivity use cases. Telstra takes care of the rest, from activation and platform management to change management.

Organisations all face different challenges, which is why Telstra has put together the Trader Voice SIP Connect Playbook, which offers core considerations for organisations across the industry in managing their SIP transition.

With expert guidance for large and mid-sized banks, buy side firms, and a range of different brokers, it’s designed to give trading organisations the insight they need to take advantage of what SIP has to offer.

For tips on how your organisation should manage this often-complex migration process, access your copy of the Trader Voice SIP Connect Playbook.