The Next 10 Years
What will the next 10 years hold for institutional market participants?
We asked CEOs of three technology providers to envision some of the big trends.
Vijay Kedia, CEO, FlexTrade
OMS & EMS (OEMS) integrations will become far more fluid, frictionless and seamless, such that the buy side will not be concerned about whether a feature belongs to an OMS or EMS. OMSs will catch up with EMSs in performance.
Already gaining momentum, fixed income trading will become far more electronic with growth in CLOBs, liquidity-seeking algorithms, dark pools, and blotter scraping.
Traders today specialize in specific asset classes such as equities, FX or fixed income. Continued advancement in the multi-asset EMS will empower traders to be multi-asset experts, bringing down the walls between traders, desks and technology separated by asset class.
The EMS will become the primary information hub for traders. They will offer on-demand integration of external data sources, be it third-party real-time research, social-media generated information, or trading signals and intelligence provided by experts and quants on a subscription basis. Vendors that embrace an open architecture and are agnostic to integrating external APIs will be clear winners.
Augmented reality will enable traders to be far more impactful and aware of a broad range of information, scenarios and real-time events.
TCA, which today plays a fringe role in trying to shave fractions of basis points via pre-trade and post-trade transaction analysis, will advance deeper into OEMS integrations and result in a multi-basis-points performance impact.
AlgoWheel technology will significantly advance to become the most critical and meaningful component of the EMS. AlgoWheel will take the emotion and bias out of the trading process leading to a quantifiable, systematic, consistent and continuously improving trading process.
Generic technology advancements such as AI, machine learning, virtual assistants, cloud computing as well as other not yet known advancements will accelerate and empower all of the above.
Investments in OMS & EMS technologies over the past 20 years have created the foundation to build the truly exciting developments that lie ahead!
Joe Wald, CEO, Clearpool
The trend of transparency is really picking up steam. You can go back to the early days of electronic trading and look at some of the players that started out back in that time, and how the markets have evolved. Transparency is the one thing that has not been broken at all — it’s been a solid uptrend all the way through, and every year we get more transparent.
Now we are at an inflection point in the level of transparency, because you have innovation, you have regulation, and you have end users that are all pushing for the same thing at the same time. It doesn’t usually work that way.
Entrepreneurs often focus on areas where things may be opaque. If transparency is a theme, that fits well with what entrepreneurs do best in many cases, which is see these things as they’re developing and take them to fruition. So it’s a pretty good time to be an entrepreneur.
Scott Rosen, CEO, Visible Alpha
The pace of change to the institutional research business has accelerated due to the unbundling requirements of MiFID II, which go into effect in January 2018. With or without MiFID II however, tighter budgets, increased competition and heightened focus on the quantified value of traditional sell-side research have been forcing structural changes on the industry.
Looking ten years ahead, we see an institutional research space where sell-side and independent research becomes more disaggregated and tightly integrated into buy-side workflows. Robust tools will allow investment professionals to seamlessly discover and incorporate insights from a multitude of sources without leaving their own online analytical environments, while research providers retain granular access control over their intellectual property. With more focus on differentiation, we believe you’ll see even more specialization of research coverage and far greater transparency into the calculus that goes into analysts’ opinions.
Some market participants would say it has felt more like 100 years.
For better or for worse, Lewis tome made a big splash in electronic markets.
Innovation and regulation have redefined financial technology.
FactSet executives opine on what has changed -- and what has stayed the same.
CDS mania and crowded trading desks were trendy in 2007.