Regardless of asset class, the key skills required to work on a trading desk are data analysis and market knowledge, followed by market experience and knowledge of market structure, according to a new study by Refinitiv – Evolution of Trading covering equities, fixed income, and FX trading.
As for tools, email, market data terminal and Microsoft Office topped the list.
The report is a three-part series based on research commissioned by Refinitiv with Coalition Greenwich which surveyed market professionals, globally across the Americas, Asia Pacific and Europe across asset classes, regions, and organisation type.
It found that trade execution and post trade are more automated for each of the asset classes while there is less so for client pricing, compliance checks and risk management.
In addition, multiple areas of the trading workflow are considered to require greater automation, including trade execution and post trade.
It noted that automation, alongside vendor consolidation will be the most common way firms cut costs. Limited budgets and integration issues are the main barriers to adopting new data sets, solutions, and technology.
Breaking down the asset classes, the report showed that for equities, automation is prevalent, but the market remains bifurcated with 34% of firms automating more than 75% of their equity trading while 56% automated less than 25%.
It also noted that 44% of equity benchmarks are calculated in real-time – by far the predominant method – although not all firms are doing such calculations in the cloud. However, this is expected to change in the future.
As for fixed income, the report found that the next phase of market automation will expand the focus from the point of execution to the full, end-to-end workflow.
Around 60% of surveyed fixed-income professionals said they would be spending more time “working to automate processes and workflows,” in the next one to three years.
There was also a view that the next wave of electronification is likely to come via less liquid instruments such as emerging market bonds and loans.
“As client needs, market structure evolution, regulatory changes and cost pressures are all driving the market forward, our research seeks to better understand the impact of technological innovation on the capital markets in a post-pandemic world,” said Dean Berry, group head of trading and banking solutions at LSEG
He said, “At the same time, our data-informed insights enable us to better provide technology-driven solutions that help our customers deliver greater value to their clients.”
Kevin McPartland, head of market structure and technology research, Coalition Greenwich, said, “Automation is no longer about only trade execution, but instead improving the full trading lifecycle.
As such, market participants are increasingly focused on pre and post trade analytics that require increasingly larger amounts of unique, high quality market data. Those that can connect these dots will see workflow efficiency, and in turn profitability, outpace that of their peers.”
©Markets Media Europe 2022
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