Michael Horan, director, head of trading, Pershing
The relentless march of algorithmic trading into execution workflows will continue to add to rising volumes in closing auctions across Europe. This will show more intensity around blue chips stock and ETFs as passive investing takes a further hold on equity trading investment profiles, further compounding the skew of liquidity dispersion towards the close. Intraday trading will see growing use of systematic internaliser liquidity and periodic auctions as the sell-side attempts to squeeze implicit trading costs as low as they can throughout the coming year.
Enrico Bruni, head of Europe and Asia business at Tradeweb
As market participants look to cut costs and operational risk, demand for more efficient trading solutions will increase. Portfolio trading will be a key focus for institutional investors and trading venues. Electronic portfolio trading will drive the migration to fully electronic workflows. We’ve already witnessed this shift after we launched our own portfolio trading solution, which we’ll continue to tweak and enhance in 2020. In a market where ETF basket trading is so vital each day, electronic portfolio trading is an innovation that will shape the future of the fixed income space.
Naz Quadri, global head of enterprise data science at Bloomberg
In 2020, we will continue to see the democratisation of data and proliferation of artificial intelligence (AI) reshaping the financial services industry. The front-office was the first to fund and research AI’s potential to unearth valuable insights and possibly improve portfolio strategy and performance, and next year will be critical as organisations evolve the culture necessary to realise these benefits firm-wide. Commitment from senior management to foster firm-wide collaboration and investment in data-driven technology will be pivotal to establish and spread a more data-centric culture across organisations.
This cultural transformation should be approached like any strategic shift a firm undertakes, by allocating capital and rethinking the personnel and skills necessary to succeed. Data science talent, for example, will be at a premium as financial firms look to harness the power of ubiquitous data lakes for enhanced computing and advanced data analytics across the front, middle and back-office functions.
Tyler Moeller, CEO, Broadway Technology
Ongoing disruption in the capital markets will force banks to take a hard look at their FICC trading operations in 2020. To grow and thrive, they will need to establish a relentless focus on their franchise value, embrace more of the ‘build and buy’ model of trading technology, and deploy a rich application integration platform as the foundation of their technology stack. Banks will recognise they can – and must – outsource more of their trading architecture to trusted partners to accelerate internal innovation, deftly handle aspects like order management and Ecommerce, and enable trading workflow automation between various areas of their FICC operations. As banks search for efficiency, we’ll see a consolidation of technology and business areas and the creation of a centralised FICC trading desk. This evolution will be necessary to drive innovation while reducing costs and maintaining competitive advantage as trading margins and regulatory requirements continue to tighten.
Gareth Coltman, global head of trading automation, MarketAxess
2020 will be the year that data-driven, automated workflow becomes an essential and ubiquitous feature of the buy-side trading desk. The tipping point that has already been reached by the largest and most sophisticated firms will hit the rest of the market – no one will want to be left behind. And the size and complexity of trades being executed through AI-based tools like Auto-X will expand, as traders take advantage of faster, more accurate and more intelligent data to enhance their performance.
Andy Mahoney, head of sales EMEA, FlexTrade
Over the last few years, we’ve seen the beginning of a trading desktop revolution, where an open architecture approach is now finally being embraced, offering traders a seamless workflow experience across applications. At the same time, we’ve seen an explosion in the amount of data a trading system needs to ingest and analyze, with fast, secure integration options now being provided through the likes of OpenFin and Symphony. 2020 will see the dawn of the augmented desktop, where smart data and desktop interoperability meet with a focus on where trader and technology meet. The augmented desktop creates a seamless workflow experience for traders, where data is presented intuitively, with machine learning-driven next actions, consistently across all applications.
Lucas Nuzzi, director of technology, Digital Asset Research
For the past three years, conversations around the institutionalisation of digital assets focused in part on the lack of qualified custodians. That changed in 2019, as major institutions like Fidelity stepped in with custody offerings. In 2020, the issue of market manipulation and clean crypto prices will be the main focus of financial institutions and regulators alike. Over the course of this year, US regulators signaled time and time again that the lack of reliable pricing is the main barrier preventing the approval of exchange-traded products, like a Bitcoin ETF. This will necessitate the vetting of exchange pricing data in a way that identifies, quantifies and excludes manipulated data from price calculations. Clean prices will contribute to more reliable valuations and risk management, and will ultimately make institutions more comfortable with the asset class.
Adam Toms, CEO, OpenFin Europe
As we head into 2020, collaboration remains the focal point in order to accelerate innovation and solve real business challenges across the capital markets industry. Enabling individuals at the grassroots level to drive innovation, coupled with promoting the role of FinTech champions and heads of innovation at larger institutions, as well as creating structures and standards that support open and collaborative ways of working, will bring about a sustainable culture of innovation across finance services. In the current political climate, collaboration to drive innovation and economic growth as well as maintain London’s position as a global fintech hub, can only be a good thing.
Anders Kirkeby, head of open innovation, SimCorp
Alternative data (not data for alternatives!) will see a lot more new entrants, offering early adopters a chance to generate Alpha from more unique datasets. But the current number of vendors in this space is far too many – in excess of 100 at last count – making it difficult for the buy-side. To truly thrive, I suspect there will either be consolidation in the market or the attention will shift to alternative data aggregators, who can simplify the choice available. The latter outcome is the most likely and more effective; data aggregators get better at speaking to enterprises faster than any single alternative data vendor with a unique dataset, but few customers to learn from.