The TRADE’s Crystal Ball 2021: Technology and data

Gaze into The TRADE's crystal ball for insights from trading technology and analytics providers on their predictions for the year ahead.

2020 has undoubtedly led to an acceleration of a number of technology trends that are set to continue into 2021 and beyond. They broadly sit under one common theme and that is ‘the future of work’. 

Now more than ever before, accessing the right tools on the trading desk is crucial with traders moving from six screens to two and from location to location.

Strides have been made to accelerate the digitisation of workflows while maintaining system resilience and security in the new normal. Going forward, we expect to see an even greater focus on empowering employees to be as productive as possible surrounded by hyper-personalisation, intelligent contextual workflows and democratisation of desktop apps to deliver the very best user experience.
– Adam Toms, CEO, OpenFin Europe

The speed race shifts up a gear – How fast you acquired data used to be the main driver of alpha – with hedge funds racing to build infrastructure and invest in co-location. Going forward performance will be driven by how fast you derive intelligence from that data – testing and tweaking algorithms and trading strategies at speed. 

Cloud-based ecosystems with next-generation analysis tools exponentially expand what’s possible, at more reasonable cost.  Easily ingested data streams via APIs will continue to level the playing field – but creating the intelligent frameworks to quickly get the most value from the data to inform trading will be where the race is won.
– Stephane Leroy, co-founder, chief revenue officer, QuantHouse

The future of investing is bright – more transparent, more personalised, and delivered as a service. During 2021 the industry will transition from a product model to a service model – with more Asset and Wealth Managers applying smart technology to build, visualise, tune and deploy client portfolios and solutions in a highly personalised manner – enabling customisation at scale. How will established firms do so?

We have seen a growing number, especially large and medium-sized managers, getting comfortable with a partnership-based model, whereby they build on top of an existing platform like ours in order to accelerate their go to market and increase their ROI. Because ALPIMA’s platform is configurable and designed to be programable, our enterprise clients don’t need to recreate the wheel and build all the technology required to meet their objectives and satisfy rapidly changing customer needs.  This trend will likely accelerate in 2021 and beyond.
– Pierre Mendelsohn, CEO, SaaS platform for investment management ALPIMA

The events of 2020 have changed how we work and removed many obstacles to improving efficiency. This drive will continue throughout 2021. Banks will reduce costs by removing layers of middle management and exiting unprofitable business lines. Automation of low-value, high-volume business will continue, so sales automation tools for higher value interactions (and to satisfy Compliance) will become essential.

Differentiation in customer service will come as the result of specialisation, as it will in the build and deployment cycle. Trying to build everything in-house will stop, and banks will continue to turn to specialist technology firms for components or complete systems. Those with the flexibility to offer both will prosper. The use of mobile technology in an institutional setting will accelerate as both buy-side and sell-side become unchained from traditional workplace settings.
– John Ashworth, CEO, Caplin

The race for speed is over. The race for data and analytics is on. And the industry is waking up to the predictive power of historic data to support alpha-discovery and decision-making processes. Whereas this trend has certainly pre-dated the pandemic, COVID-19 has accelerated the pursuit of predictability and the need to make sense of how the markets behave, fuelled by high levels of volatility and uncertainty. Predictability only enabled by deep, rich historic data.

This is why I think access to the most granular, Level 3 order book data and the tools to analyse it will be crucial for market participants looking to maintain a competitive edge. It gives systematic hedge funds, quants and algo traders the ability to look beyond recent market events, analyse long term cycles and trends, and backtest their trading strategies. 
– Paul Humphrey, CEO, BMLL Technologies

2021 will see increased adoption of new technologies and automation across the industry, as we all adapt to new ways of working. Accessing liquidity and deal flow opportunities will continue to be a top priority, however, equity capital markets have remained largely untouched by innovation and automation.

Given the decrease of active capital and a reduction of liquidity in particular in small and mid-cap stocks, it is more important than ever to make sure this segment of the market follows the rest of the industry. Some of the largest asset managers – already in Beta on our platform – have made it clear that discovering liquidity, often in excess of 5 days ADV, is a major pain point and needs to be addressed. I believe that we, as an industry, are on the cusp of changing this. Technology is the answer to bringing innovation and automation to equity capital markets.
– Mark Badyra, CEO, Appital