In recent years, trading desks have been transformed by rapid advances in technology and data integration, which has delivered various new capabilities for execution and workflow management.
However, this in turn has also left firms with a new challenge – having to navigate an increasingly crowded ecosystem of tools and determine which solutions deliver genuine value.
Shifting through the noise
For panellists speaking at the Fixed Income Leaders Summit, shifts away from fragmented platforms towards cloud-based integration has enabled the buy-side to consolidate various data sources into unified cloud platforms, which has in turn has given a significant boost to workflow and analytics capabilities.
Explaining how this integration has allowed the buy-side to enhance their abilities to capture and analyse data, one expert asserted: “The thing that we’ve really been able to leverage from the buy-side perspective in terms of data and execution intelligence is cloud-based data platforms.
“So instead of going off and looking in five or six different places in different systems, you can amalgamate that data and get it in one place. That’s also fed through to the structure of the trading deck.”
Reflecting on this, conversations also focused on the data angle – specifically, whether the industry has now hit a point where the quantities of data available to desks has becoming overwhelming, making it more difficult for traders to surface relevant data without losing focus on execution.
“Over the past five years, we’re being asked to do more and more with fewer traders. But that then means you’re overwhelmed with this flood of data coming from multiple different angles,” added one expert.
“If I spend time trying to work out where the best price was across all these things, then I’m not actually going to do any trading all day. The bonds will have matured by the time I actually ask for an offer. So it’s not just about getting the data and boiling it down to what you need. It’s about finding a way to bring that efficiently into your workflow and pre-trade TCA.”
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However, as one panellist emphasised, these data pressures instead surface the importance of organisation, and ensuring you are aware of what is best suited to what your firm and desk truly needs in their trading stack.
They added: “It’s not an information overload, but an information consumption problem. You need to organise your data, and you need to know how to surface it at the right point in the workflow.”
“There is a huge amount of stuff at the fingertips of traders now. So we need to pull all of that into one place, clean it up, and make sure it’s serviceable and accessible to the traders so they don’t have to go searching through different systems.”
A relationship business
When it comes to data and budget constraints, the panel also indicated that firms are often faced with decisions around weighing up investing in internal talent or buying ready-made EMS solutions.
Explaining this, they emphasised that active managers tend to build custom cloud tools, while others rely more on vendor platforms for connectivity and data feeds.
Read more – Traditional relationships still anchoring buy-side as automation ramps up in FX markets
Yet for one expert, the value of relationships and human touch still comes out on top – as is reflected in many other sectors of the industry.
They explained: “What we’re actually having to deal with is a compression of fees and a lot of budgetary pressures. You’ve got to balance it between hiring a junior with that quantitative background versus do you buy an EMS that provides the data for you and already has the connections in place, or do you use an AI model and start spending your budget on tokens?
“You’ve got to have a think about what works for your business. And for me, I kind of sway more towards the hiring the people because ultimately a lot of this will still come down to a relationship model.”