At TradeTech this year, you are scheduled to speak on an all-star panel about systematic trading. Why do you think automating trading workflows is such a hot topic now?
Broadly speaking, automation can be categorised as either execution or workflow automation, and both types of automation can help to drive trading cost reduction, risk reduction and minimise manual effort. Hence, it’s paramount in delivering for clients. Automation also helps to free up traders’ time so they can implement tailored trading styles in volatile market conditions, thus the heightened industry focus and conversation on automation over the past year.
What role has automated trading workflows played during the pandemic and recent market volatility?
Thanks to the automation of workflows and talented traders, we successfully navigated a material increase in last year’s volume of orders, which increased 40% compared to 2019 in EMEA. This was achieved with the same level of resourcing, whilst minimising trading costs and without any errors.
What are the inherent benefits and risks of systematic and automated trading?
Consistency of outcome, reduced trading costs, reduced manual effort, and reduced risk are all end goals when automating execution and other workflows. A consistent approach should also result in more comparable data and improved analytics. From here, quantitative and machine learning generated recommendations can be leveraged by both traders and automation systems. But it’s important to note that whilst automation is a powerful tool, it’s not an end in itself. To reduce the likelihood of any automation-related pitfalls, it’s good practice to keep your end goal(s) front of mind.
What role will automation play in the future for trading desks?
The industry is evolving as fast as ever and there will be periods of elevated volatility due to market cycles and exogenous events. Trading desks need to utilise agile methodologies and have a strong foundation of talent and platform, including automation, to be nimble and flexible enough to pivot in this environment. Automation will remain a key part of this story, offering flexibility and continuous improvement of trading performance.