How are trading floors likely to adapt to the ongoing pandemic?

As the Omicron variant forces firms to rethink best-laid plans to fill trading floors again, what tools are firms likely need to help traders thrive in a distributed work environment?

Just when trading floors were starting to get busy again, has the Omicron variant dispelled any expectations by buy or sell-side firms had that trading would get back to normal?

“It seems unrealistic that firms will be able to get everybody back on the trading floor in the first half of next year,” Jim Miller, chief customer experience officer at financial markets’ infrastructure and technology platform specialist Symphony, told The TRADE.

So what options are there for buy- and sell-side firms? Miller says some larger firms had already started moving to smaller, distributed trading floors during the pandemic, a trend that looks set to continue.

But as more people trade virtually, he says firms need to ensure that the technology stack is more tightly integrated with [trader’s] favourite trading tools and better collaborative tools for distributed working. They may also need to institute a different set of compliance rules for people that work from home in terms of how they use voice and mobile.

Miller believes voice trading applications that leverage Natural Language Processing (NLP) will play an enlarged role in future. In May, Cloud9 Technologies, which is part of Symphony, announced that it had partnered with Sphere to use artificial intelligence technology to extract information from voice data, so it could be converted into electronic pricing.

As trading becomes more distributed and trading floors are digitised, Miller says we’re likely to see a resurgence in voice trading as there will be a need for more voice interaction so traders still feel connected with their colleagues.

The leveraging of voice solutions integrated into the trader’s workflow will also accelerate, he says. In this way NLP can be used to make voice trading almost like electronic trading. “It [voice] becomes more important when people are working remotely,” he explains, “as it eliminates the need to manually rekey information. Instead, you can just use voice recognition to feed that information into your downstream workflow, which saves minutes per trade. Those savings add up when you multiply it by a firm’s total trading activity.”

As NLP technologies mature, Miller says traders will be able to more easily jump between a chat, text or voice, and automatically book a trade into a system with little or no human intervention, much like voice-activated devices such as Amazon Alexa work today, but in the consumer world. “The problem with NLP previously is that it had a low reliability rate,” says Miller, “but it is changing rapidly.” One of the biggest challenges for the technology is that traders speak their own language when trading different asset classes and multiple dialects are often used, which NLP models will need to learn.

Better collaborative tools

One thing that is currently missing from the remote or virtual trader’s toolbox is better collaborative tools to help traders, who are used to talking and interacting with their colleagues on the trading floor, almost feel like they are in the same room with one another. In the next 10 years, Miller says we could see applications like augmented reality (AR) heads-up displays being used by traders.

Sound far-fetched? Miller says it could help traders in distributed work environments more easily collaborate. “Zoom is good,” he explains, “but it is not like interacting face to face. As traders become more distributed there’s a value to AR, but trading technology is always evolutionary, rather than revolutionary. It will have to be proven in other markets first before it comes to trading.” 

Trade from anywhere

 So, as AI, AR and voice trading applications grow in sophistication, is the trading floor likely to disappear in the coming decade? Miller says that is highly unlikely, but it will transform as there will be more of a let traders work from anywhere approach, leading to physical trading floors becoming more fragmented. “Instead of having trading desks of 30 people, a lot of large trading floors are moving to smaller, distributed trading floors, so they’ll have people in the UK, Paris, Berlin, and instead of 30 people on one trading floor, they will have three desks of 10 spread across different locations.”

Miller says the pandemic has also helped firms get more comfortable with putting critical services in the cloud. “That started happening in 2019, and accelerated during the pandemic. We’re working with firms who previously required all voice to be maintained on premise. Now some of them are more comfortable with those recordings being hosted in the cloud. It doesn’t need to be on prem anymore.”

Perhaps one of the biggest lessons from the past 12 to 18 months is that hybrid and distributed work environments are likely to persist for longer than many expected, and that also goes for the trading floor. Things are unlikely to get back to normal, whatever normal is, anytime soon. So firms need to be prepared and provide traders with the tools to trade from anywhere.