Trading organisations need to turn the manual art of trading operations into the science of automation to reduce costs, deliver the best outcomes for clients and comply with the transparency requirements of Markets in Financial Instruments Directive II (MiFID II). They may also need to reassess business models that are no longer fit for purpose.
These issues and more will be discussed during a keynote panel at next week’s A-Team Group Intelligent Trading Summit in London. The panel – Intelligent Trading Insights and Predictions for 2017 – will be moderated by Andrew Delaney, chief content officer at A-Team, and joined by Chris Donnan, chief technology officer at Tyler Capital; Kenneth McLeish, managing director and global head of trading technology at JP Morgan Asset Management; Kee-Meng Tan, senior advisor and head of execution strategy at BNP Paribas; and Brian Schwieger, co-head of equity, funds, and fixed income secondary markets, and head of equity product at London Stock Exchange Group.
The panel will consider the impact of regulation on trading, advances in technology and the need, at many buy-side and sell-side firms, to overhaul outdated business models and build models that can provide a sustainable future in a highly regulated, volatile, competitive and low margin market.
We spoke to a couple of the panellists before the event to get a sense of market participants’ expectations for the coming year. Donnan expects 2017 to be a year of internal scrutiny as the base cost of trading business is rising, margins are low and firms need to figure out the optimum business model for survival. He comments: “There are challenges for all in this business. I have never before seen so many firms questioning what they must do to survive.”
Donnan also forecasts a year of continuing pressure on firms resulting from regulation, uncertainty caused by world developments such as Brexit and the election of Donald Trump, and increasing regulatory interest in cybersecurity. He also notes the imperative to implement machine learning that will automate trading strategies and perhaps put quants out of a job.
McLeish names the top challenges of 2017 as regulation, particularly MiFID II and the impact it will have on the market, and the need for asset managers to make a seismic shift from passive to active management.
Addressing these challenges, he says: “Asset managers need to be at the front and centre of technological revolution. Many sell-side firms are behind the times. They need to make use of more and better technology to become increasingly systematic and efficient, and to scale up and reduce costs. There are some very sophisticated hedge funds, but also many asset managers that have been doing things manually for a long time. It is time to turn trading operations from art to science and drive automation into the buy-side trading space.”
Join the discussion at A-Team’s Intelligent Trading Summit to find out about:
- The challenges of 2017
- Impacts of regulation
- The drive to automation
- Coping with uncertainty
- Optimum business models