As automation increasingly shapes workflows and processes across the industry, experts speaking at FILS in Amsterdam stressed the need to ensure it is used to optimise trading, rather than to replace human skills.
Karim Awenat
Undeniably, as discussed during the conference’s e-trading panel, automation and electronification can offer huge advantages to traders, such as speeding up workflows and adding efficiencies, however experts underlined the need to maintain the human element within this.
This was underlined by Karim Awenat, head of EMEA and APAC macro trading at Invesco, who argued that automation must be better balanced when used by the buy-side, to allow traders to apply judgement and human skills.
He said: “Automation and electronification has gone too far on the buy-side and we need to bring a stop to it. Yes, there’s efficiencies and room to stop sloppy errors, but frankly automation and electronification has been used as a stick to beat traders to do more volume with less and to hire fewer people. That’s led to the trading desk becoming understaffed and under-resourced, particularly on the junior side. And there’s no real room for growth.
“What you actually need to do is make the trading desk more efficient and not busier, and the way to do that is to make sure it is not seen as an expense. And how do you do that? You find a way for the trading desk to provide input.”
Additionally, discussions were quick to point out the importance of ensuring that traders retain control even when automation is applied, to avoid errors during events such as market outages.
Awenat added: “It’s like when something has happened on the road in front of you and suddenly you’re in charge of a car. You’re out of practice; you haven’t been paying attention as much as you would have been. You’re then at the point where the electronification disengages and there’s a market disruption. If your non-traditional liquidity providers have disappeared, who will be there for you? That is when the buy-side relationship to the sell-side really matters.”
Despite this, conversations also referenced the importance of electronification and automation, admitting that for most firms, they are unavoidable and have become intrinsic parts of the industry.
Matthew Cheung, chief executive of ipushpull, indicated that agentic AI and chatbots are the next step in the evolution of trading automation, and if used correctly, will provide bounteous opportunities to improve traders’ working efficiency.
He said: “The buzzword of the year has been agents and agentification. If you take the very far end which is not going to happen in financial markets for quite a long time, autonomous agents are the next step. It’s going to be a fair while until you’ll start to see those on the trading floor, for all the obvious reasons. But before that there’s this other area where it’s more around agentic workflows and how you’re using technology to approach your workflow.”
While both the challenges and opportunities presented by automation are clear, panellists also discussed the best methods to ensure the greatest benefits are achieved.
For Deniz Mace-Jones, head of rates and credit product and e-sales at UBS AG, implementing integration and industry-wide infrastructure is essential to unlock these opportunities.
“Onboarding is difficult. But the way that anyone should look at this is in the past banks used to mostly just build everything in house and asset managers. As the market has become more electronified, as we use technology more, and as we deploy more APIs, it’s actually quite hard for technology teams to cover all of that. Which is why we’ve seen the fintech world bring those offerings, and everyone should sit down and look at it and say, what is the use case for this?”