As multi-asset trading becomes increasingly common, firms across the industry need to be open to change, market participants advise. That being said, it’s vital to be aware of the risks that these changes bring, along with their opportunities. Read on for more coverage of TradeTech’s multi-asset conversation.
As multi-asset trading becomes increasingly common, firms across the industry need to be open to change, market participants advise. That being said, it’s vital to be aware of the risks that these changes bring, along with their opportunities. Read on for more coverage of TradeTech’s multi-asset conversation.Using one front-to-back system with a shared language is good for smooth communications and efficient workflows limits specialisation capabilities, the panellists agreed. On the other hand, although highly specialised systems give businesses an edge they can hinder scalability. Firms need to ask themselves how complex they want their businesses to be, one speaker advised, and consider how fast they want to be able to adapt.
Some capabilities that firms may want to introduce are not yet available in the systems they’re using. AI, for example, and other out-of-the-box ideas that teams may have, cannot be supported by existing OEMSs.
Data, as always, is key. One speaker told firms to aim for upstream flexibility and downstream good, readily-available data. They added that there needs to be clarity around who owns datasets and what they are equipped to do; with the majority of time spent on data collection and cleansing, having systems in place to use that data as efficiently as possible is vital.
When it comes to getting the right people on the desk, one panellist stated that the narrowing gap between approaches to asset classes and the commoditisation of many asset classes has allowed firms to hire based on curiosity and creativity rather than solely looking at technological know-how. Similarly, this change allows for more cross-asset fertilisation across strategies, with traders able to share ideas and strategies.
Firms are looking to cover more business with less, one panellist explained, working ‘smarter’ to achieve greater efficiency. However, this approach brings its own issues. While the ‘risk of the human’ is reduced, if a machine breaks down and there’s no backup in place, desks do not have enough people to cover all trades. Regulators are aware of this risk and are acting accordingly, but with the industry in a transition phase as it becomes more technology-reliant this is a concern that companies need to take into consideration.
Establishing a symbiotic relationship between vendor and client is important when it comes to multi-asset strategies, one speaker commented, advising firms to find strategic partners to collaborate with. From the vendors’ side, being open to sharing data and allowing others to interact with it is an important step to take, one panellist said.
The sell side should be aware that it may be moving towards being a liquidity provider, not just a liquidity taker, one speaker advised. Being aware of, and receptive to, change is an important characteristic moving forwards. Similarly, another speaker added that vendors should be open to sharing data and allowing others to interact with it, even if it is not necessarily being used in the way they intended.
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