Mahmood Noorani, founder, Quant Insight:
MiFID II combined with the threat to active asset managers from passive point in the same direction: discretionary funds need to embrace big data & smart technology to regain an edge. To some degree, this happened with large asset managers hiring in-house quants. But history suggests these teams will be siloed, with insufficient access to front office traders, meaning their output will lack relevance. While the first wave of FinTech was dominated by new pipelines of alternative data, the success of phase two will be determined by having the experience & expertise to know which data is relevant, how to interpret that data & translate it into actionable investment ideas.
Compliance technology aplenty
Peter McKenna, global marketing director, Volante Technologies
Regulation will undoubtedly feature on people’s minds in 2018. Firms will need to be prepared for MiFID II, PSD2, GDPR and other up and coming regulation. Until now compliance challenges tended to be handled manually, however, as the burden of compliance grows ever more complex, we see increasing use of technology to meet these regulatory demands. This is primarily driven by the need for efficiency, cost reduction and ultimately, reduction of risk. Looking more broadly, especially in payments processing, we predict increased use of ‘smarter’ software technology to gain the business agility needed to thrive in in today’s increasingly competitive digital economy.
AI ‘job threat’ discussion will be a thing of the past
Cliff Moyce, managing partner, DataArt
The AI boom will go exponential and the skills gap will turn into a war for talent, as warnings about job threats from AI evaporate and AI skills becomes the biggest hiring driver in the industry. Staff concerns will subside as people realise AI does not do work people do; it does work people cannot do. AI techniques like pattern recognition, machine learning and fuzzy logic will help firms derive deep learning from structured and unstructured data to drive strategic planning; use Big Data tools to support risk management and operational planning; and predict financial turbulence and assess risk of financial contagion.
Full transparency into routed orders could be a necessity
Peter Maragos, CEO, Dash Financial Technologies
Asset managers have been calling for their brokers to provide full transparency into their routed orders for some time. These calls have been getting louder and louder, and we think 2018 could be the year that some managers finally make it a requirement for any broker that wants their order flow. We also think that unbundling may soon be coming to the traditional brokerage commission model with a push towards “cost-plus” pricing, which removes all conflicts from routing decisions and allows the asset owners to be rewarded for liquidity provision.