Global buy-side perspective: Technology will shape the liquidity landscape of the future

The TradeTech discussion centred around the influence that technology has on trading strategies – but it’s a marathon, not a sprint.

Technology will shape the trading strategies of the world going forward, and those firms that don’t adapt to this will get left behind, agreed a global buy-side perspective panel at TradeTech in Paris, in a discussion on which trading strategies should be prioritised to best adapt to another year of market uncertainties.

Matt McLoughlin, head of trading at Liontrust, stressed that: “You have to keep the end client in mind, and that focus is really important. But those firms that can offer liquidity and differentiate it are the ones that will stand out. The future is going to be all about technology, and that’s going to be crucial in navigating the liquidity landscape.”

Cathy Gibson, global head of trading at NinetyOne, agreed. “The landscape has really evolved over the last five years in terms of new liquidity providers and participants coming into the market. It’s not just banks versus buy-side – we’ve got everyone from hedge funds to the rise of ETFs, and now it’s all diversified the pool of investors. It’s critical that we centre our strategies around this developing pool,” she told the audience.

“Technology is important, but we have to make sure it’s the technology we need. There are some basic things we need to fix before we should be looking at the sexier side of things, such as the book-building process, or t+0.”

Despite the importance of technology, the panel emphasised that it could not and would never replace the personal touch.

“Human relationships and trust are really important. Don’t forget that interaction. As technology advances, the human element is still a vital part of the market,” noted McLoughlin.

“In crises like Ukraine/Russia, having an established relationship where you can pick up the phone and talk to someone you trust is invaluable, and technology is never going to replace that,” added Gibson.

“Love it or hate it as a concept, it’s not going to go away, so how can we use it as a force for good? Technology is going to shape what we do and how we invest over the coming years.”