Industry players may have competing interests but they need to have a strong focus on sustainability, retail investors, innovation and operational resilience if they want to drive their businesses forward, according to Guillaume Lesage, Co-CEO and COO, Amundi Asset Management in Tuesday’s Buyside Keynote at Trade Tech Paris.
Kicking off the conference, Lesage reiterated that the last two years have put pressure on both sell and buyside firms with turbulent market conditions, a changing macro economic profile and draining liquidity profiles.
As a result, buy and sellside as well as technology firms need to better cater to the demand of their clients with environment, social and governance (ESG) being a top priority. However, it is not just about developing relevant ESG products but also proving they are adhering to the same sustainability standards as their counterparties.
Lesage also highlighted the greater democratisation of investing and the rise of the retail investor across Europe as individuals become increasingly responsible for their retirement. This means the industry will have to offer more adaptable solutions to help them invest.
Unsurprisingly, all these key trends require greater investment in technology, especially in sourcing liquidity which has become scarcer in the last couple of years. This was a main theme at the panel – navigating the new market structure regime and how firms can collaborate with brokers to gain insights into key market trends, drive execution and boost returns in stressed markets?
“If you look at it from a volume perspective, we are 23% down year over year, but if you look at the average, and take out the war in Ukraine in 2021 and Covid in 2020, we are not that far off from the average in 2017,” said Rupert Fennelly, head of EU equities electronic trading and sales at Barclays in the following panel.
However, he adds, “what has changed is the the make-up of liquidity. There is not as much pure discretionary activity as in the past.”
Fennelly said it is not just about venue selection but also about how the liquidity is provided and the type of protocols. “Clients are telling us this is how we are being measured. How you achieve that outcome is up to you, you just need to provide transparency around it.
The panellists also noted that the market has shifted away from adverse selection. “It’s not all about speed. Marrying that with the right scheduling will lead to institutional players driving how they get liquidity rather than being picked over in a speed game,” said managing director, co-head of electronic trading at BMO Capital Markets, Joe Wald.
Tom Stevenson, head of EMEA equity trading at Fidelity International, believes “You need to have all the tools in the armoury to navigate contracting liquidity. However, its not just about the technology but also “about deepening existing relationships and leveraging new ideas.”
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