Data, data, everywhere
Andy Mahoney, head of sales, FlexTrade
Once the dust has settled on MiFID II, clients will start looking to digest and interpret all the extra data MiFID II transparency has brought with it. We are already looking to hook up to a number of APA providers, in order to take a real-time stream of trade reports directly into the EMS. Practically every client we speak to on the buy-side already has a desk quant, which are all hungry for the new data MiFID II is going to bring. Those who have the tools available to analyse, and draw conclusions from this data will be the big winners in 2018.
A desire to understand alternative data
Louis Lovas, director of solutions, OneMarketData
Alternative data is driven by the desire to understand it. You may only find one substantial piece of information in the whole data dump and you will want to see if the information correlates with traditional data. The multifactor models, moving beyond statistical models to machine learning is used to understand if this alternative data provides insight and then opportunity for alpha. While there has been a small height curve with social media –things related to transaction and satellite data are what’s coming next. Furthermore, we are mostly seeing clients interested in a hybrid cloud data hosting model. With the ability to mix and match the cloud infrastructure between private and public we expect the hybrid model to continue to grow in 2018, especially due to compliance and regulatory reasons.
Rise of the independent analyst
Arzish Baaquie, head of UK, Smartkarma
The independent research provider will begin to rise to prominence in 2018. Their more potent voice in the market will have an impact on everyone including investors, corporates and investment bankers. We expect that by this time next year, if you aren’t open to independent analysts then you aren’t speaking to the most influential voices in the market. Independent insight providers have been empowered by regulatory changes, such as MiFID II, as well as the reduction in market barriers to entry, such as powerful technology networks and platforms that aid transition from sell-side to independent roles. Many more highly regarded analysts will be taking the leap next year as unconflicted research becomes more widespread and necessary for investors’ strategies.
Data will be power
David Donovan, senior vice president, Sapient Consulting
Data used to be expensive, proprietary and the secret sauce for asset managers. However, as information becomes more ubiquitous, data analytics and data science can give firms an edge by turning raw data, assumptions and customer behaviours into knowledge. The buy-side is investing to find innovative ways to use these data sources and revolutionise research analyst models with true predictive modelling. By connecting real consumer behaviour with disparate internal and external data sources, firms can create a method for making these signals both visible and actionable. With the current market dynamics, building a team of scarce talent, specifically highly skilled data scientists who can filter signals from a massive amount of data, is almost prohibitively expensive. This, in turn, is leading to new platforms emerging that combine the expertise of data scientists, data collection and industry experts while delivering fact-based market models and behavioural insights.