Senior representatives from sell and buy side firms recently met together in New York at MOMA to discuss the future of trading technology and examine the main market drivers triggering a rethink in terms of where technology can play an even greater role.
CameronTec’s Chief Strategy Officer, Michel Balter, participated in the roundtable as a panelist and was joined by key industry players representing firms UBS, IEX, Marshall Wace, Wellington, Morgan Stanley, Pico Trading, Société Générale, Convergex, T Rowe Price, and CIMB Securities…
We are clearly in a time of paradigm shift in terms of how technology is developed and applied across the financial industry, with heightened pressures coming at a fast pace from both outside and within financial firms, and triggering a necessity to streamline and future-proof the trading technology stack.
Throughout the Roundtable discussion we heard that while headcount reductions are continuing to take place, firms are hiring more people in technologist and compliance roles – and that the onus and responsibility is shifting, but not going away. Further, there is a growing realisation that financial technology is increasingly competing with other industries. The competition for top minds is ever increasing, and money is no longer the only thing new talent requires. This is true in the US, primarily start-ups and Silicon Valley, but also Canada, Europe and the emerging markets. The challenge is to make the most of the staff and resources a firm has, and the Roundtable quickly agreed that both are rarely sufficient. It is finding that competitive edge which remains paramount for many firms. As a consequence, it was suggested that the business side should remain in charge of the competitive edge of the business, while the technologists build the common stack. There was consensus however that those boundaries are breaking down and evolving.
As a result of the shifting competitive edge, standardisation was a major theme throughout the discussion. Participants discussed the potential for standardisation in areas as disparate as data for analysis, time stamps, wider technological standards and how exchanges bill their clients. There is a growing need to standardise data and the input that firms receive, so that they can better understand their trading and compare like with like. Whether this ongoing drive is the role of a self-regulatory organisation or the regulators themselves remained subject to debate. All participants present agreed the buy-side will start to generate and analyse more of their own data, and how the sell-side continues to provide a competitive edge to those buy-side remains to be seen.
This all culminated in a wider discussion around where firms should cooperate and where they should compete, and how vendors can remain adaptable to these changing and disparate needs. The Roundtable agreed that the future remains uncertain, but there is a great need for the buy-side, sell-side, exchanges and vendors to standardise where possible so that the industry can continue to develop and collaborate, while remaining competitive.
For vendors, the time is now right to offer the market a truly comprehensive fully flexible trading and infrastructure solution built for the future.