FIX EMEA CONFERENCE 2016.

Tim Healy, Global Marketing and Communications Manager, FIX Trading Community.

On 3rd March 2016, the FIX Trading Community held its 8th annual EMEA Conference at its spiritual home, Old Billingsgate in the City of London. By numbers, the day was a huge success – a record of close to 900 delegates from 22 countries spanning Asia, Europe, Africa, and the Americas, featuring 40 high quality speakers, 40 sponsors, 16 sessions. The numbers only tell part of the story though.

Renowned as Europe’s largest one-day trading event, the conference brings together market participants to discuss and debate current trends in the industry. The true success of the event is down to the work of the members and FIX staff to ensure the topics are relevant, and a high level of integrity is maintained throughout some potentially contentious subjects.

The overarching theme at the event was one of collaboration. Whether it was regulatory, cybersecurity, post-trade workflow or blockchain the message from the podium to the audience was clear – collaboration and co-operation can only be of benefit to the industry.

The buyside form an extremely valuable part of the work done by the FIX Trading Community. After the keynote speeches, the opening session, hosted by Dr Robert Barnes, Co-Chair EMEA Regional Committee, FIX Trading Community, and CEO, Turquoise, gave an update on the work that has been done by the EMEA Investment Management Committee and a ‘handing over the reins’ to the three new co-chairs. The continued drive and enthusiasm of this group is very evident, and there is a real desire to push forward with the initiatives on IPOs and Execution Venue Analysis. Earlier, Maria Netley, Co-Chair EMEA Regional Committee, FIX Trading Community, presented tokens of appreciation to the inaugural chairmen that had served for 3 years.

For the first time at the event, the audience were invited to give their opinion using vote pads. With nearly a quarter of the audience make-up being buyside (see Fig. 1), it was extremely interesting to get their views on a number of different topics. The regulatory environment continues to dominate the agenda for most people. 47% of the audience said that “Everything to do with MiFID II” would be of most concern for 2016 (see Fig. 2), whilst 41% said their cost profile has changed due to an increased regulatory spend.

The Best Execution session hosted by Rebecca Healey, Co-Chair EMEA Regulatory Subcommittee, FIX Trading Community, CEO & Co-Founder, Incisus Capital Partners, was extremely well attended. Results from the audience vote indicated that the majority of respondents did not have a sufficient quantitative component to meet the upcoming requirements under MiFID II (see Fig. 3). It was noted during the discussion that there is a need for improved processes to deliver good outcomes for the end clients. Key to this improved process will be clean data. This is perceived to be a major issue by the market as 48% of the audience thought that the greatest challenge in providing best execution for fixed income is obtaining sufficient and accurate data to create a statistical dataset.

The issue of accessing liquidity isn’t a new one, however the increased collaboration between the venues and exchanges, buyside and sellside is worthy of note. The anticipated regulatory changes are expected to lead to more block trading in 2018, the majority of the audience noted. A number of order book innovations have appeared in Europe and the audience expressed a clear preference for one of these as market participants partner with each other to ensure a more efficient market structure (see Fig. 4).

The session on Unbundling showed that the growth of commission sharing agreements (CSA) has not translated to a growth in Independent Research Providers (IRP) as of yet (see Fig. 5).

The audience was split on how they see this changing in 2016, but there was a clear need for firms to address unbundling research costs in FICC with 74% of the audience saying they had not yet started this process.

Reporting to the regulators is deemed to be everyone’s responsibility. There will be a huge transformation over this with the changes in regulation over the next two years. The panel session on this topic looked at transaction reporting, personal data reporting within regulatory reporting, suspicious transaction and order reports, and instrument identifiers for regulatory reporting. There was consensus in the audience, and a call to action to ensure that they can use the FIX Protocol for their transaction reporting.

OTC Derivatives face a sea-change as MiFID II forces a new trading model involving electronic platforms and greater pre- and post-trade transparency. As the panel agreed, there is no escape from MiFID II. The relative complexity of OTC derivatives was noted as the need for unique product identifiers given the electronification of the marketplace.

FIX has had a profound impact in the post-trade workflow over the past number of years, particularly in the equities space. The post-trade panel session discussed new initiatives to broaden the asset class coverage whilst also recognising there are still inefficiencies in the entire post-trade infrastructure. There is scope to include the custodians in these discussions as the working group push the initiatives forward.

The cybersecurity panel discussion showed the value of collaboration within the FIX Trading Community. Work has been initiated and is being undertaken to develop best practices with cybersecurity being seen by many regulators as the single greatest threat to the financial markets. Cyber-threat is multi-dimensional and the means by which adversaries are able to disrupt environments is clearly growing. The panel agreed that through collaboration, sharing of knowledge, application of best practice and enabling communications between internal security practitioners, business partners and counterparties the threat can be addressed.

The final session of the day concerned blockchain, a new topic for the conference. Much discussed and much hyped, but still a relatively unknown subject for many of the audience. 40% replied “what is blockchain?” when asked where their firm stood with regard to blockchain (see Fig. 6). For FIX, as for many of the other initiatives discussed on the day, collaboration will be a key factor going forward.

The event is put together by the industry for the industry. The working groups and committees that make up the FIX Trading Community seek to educate, collaborate and ultimately address the numerous challenges that are happening in the marketplace.

We invite you to find out more – www.fixtradingcommunity.org.

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