Market conditions of the last couple of years have shown that equity traders cannot just slot in a new piece of kit to fix an issue but need a much more holistic technology approach to mitigating the risks as well as leveraging the opportunities.
This was the view of the panellists discussing how to build an innovative roadmap. “From an execution perspective, the questions that should be asked is how do we keep up with market condition such as liquidity and volatility that impact our trading costs, how can we get ahead on a systematic basis and learn how to adapt to the changing conditions, “ says Alex Hunter, head of liquidity and algorithmic trading at JP Morgan Asset Management.
Data is key and firms, he says, need to be able to store and save every piece of data whether its tick or execution on every order. “From the portfolio manager perspective, it is about looking at how they are trading in different market conditions, the quantitative metrics they are using and how this feeds into their strategies,” he adds.
Instead of just looking at the broker wheels, Hunter notes that there is greater drilling down at the portfolio manager level to assess their profiles, the sentiment they use when trading and how this feeds into the optimal strategies and then the optimal broker selection.
Although there are different pieces of technology that can address these and other issues in trading, Hunter’s colleague Ashwin Venkatraman, global head of equity trading technology at JP Morgan Asset Management believes the answer lies in open platforms such as FDC 3 which aims to provide an open standard for interoperability between applications on the financial desktop.
“This technology will make the greatest impact because it enables more seamless workflows and a cost effective way to connect the buy and sell side,” says Venkatraman. “It also provides a more holistic view of a traders workflow and not just the low or high touch trades but, for example, it market colour to be sent via the order management system so a trader saves time by not having to cross the floor to speak to the portfolio manager.
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