TradeTech 2018: The key takeaways

Systematic internalisers, periodic auctions, artificial intelligence, data and diversity were among the key talking points at this year's TradeTech conference.

This year’s TradeTech conference has closed its doors and the stands have been packed away, but there was plenty to take away from all the discussion panels, keynote speeches and working groups.

With the capital markets now firmly under the thumb of MiFID II, many attendees were looking forward to the seeing how the markets have adapted so far and what needs to be addressed in terms of technology adoption and market structure going forward.

Whether you stayed until the bitter end or were unable to make it Paris this year, here are some of the key talking points from this year’s TradeTech event. 

  • MiFID II has won over the industry but SIs split opinions

This year’s conference was the first following the introduction of MiFID II and from the messages being sent out from the panels and speakers, everyone seems to be on board with the new regulations.

That being said, the topic of systematic internalisers (SI) remains a contentious one. While SI operators were keen to extol the virtues of their services to the buy-side, exchange operators continue to suggest that SIs hold an unfair advantage by taking liquidity away from the lit markets, which inherently flies in the face of the objectives of MiFID II.

How this will play out in the long run is anyone’s guess, but it’s fair to assume that this conversation will continue to dominate regulatory spheres for some time to come.

  • Artificial intelligence is the future

This may not be surprising to anyone who has even a passing familiarly to the financial technology sphere, but almost every panel at this year’s conference made at least reference to the various forms of artificial intelligence (AI) out there and how it can benefit the industry.

In comparison to other technology buzzwords such as blockchain that create more noise than actual substance, AI and its subsets of machine learning, neural networks and deep learning, are already making inroads into the industry and the pace will ramp up considerably in the near future.

Speakers from firms such as JP Morgan, Vanguard, BlackRock and Generali Investments all laid out how they are using AI to enhance their trading and investment processes, although the unifying theme is that the technology cannot be relied on as a silver bullet: The right balance of human expertise and computing power is the future.

  • Data is king

While AI may be the new darling of the financial technology world, the reality of getting these systems right is rooted in the more mundane world of data. The buy-side in particular has historically struggled to adapt its approach to data management and structures to the new operating landscape, but it seems that may now be a problem of the past.

Many speakers throughout the conference were confident enough around their data practises and the message that building fancy technology without being prepared to do the hard work first has finally sunk in.

The presence of Google at this year’s TradeTech will also go some way to cementing this attitude. While the tech giant may have been prioritising its Cloud services, perhaps as a competitor to the already well-established AWS, there’s no doubt that it will see its data capabilities as a key asset to sell to the industry going forward.

  • Periodic auctions popularity will continue

Similarly to large-in-scale trading, periodic auctions have exploded in popularity since the introduction of MiFID II, particularly in the wake of the caps around dark pool trading. Operators such as Cboe have seen volumes surge in recent weeks on these types of venues and there is little sign of that stopping any time soon.

But not everyone is enthusiastic. Robert Ophéle of Autorité des Marchés Financiers (AMF) specifically called out Cboe during his keynote address, questioning the limited transparency of periodic auctions and suggesting that many of these trades could be pre-arranged. As such, it won’t come as a surprise to see regulators targeting periodic auctions for review.

  • Diversity issues should be front and centre

It’s no secret that the capital markets are facing a diversity problem. A prime example was the alarming gender pay gap statistics coming out of the UK asset management market earlier in the year, and this is just one aspect of a larger problem.

Many conferences in the industry now hold specific panels on this very subject and TradeTech is no exception, but it’s time that this conversation moved to the main stage and the larger audience.

As the worlds of institutional finance and technology become even more tightly entwined, the industry has a golden opportunity to embrace change and put inclusion at the top of its agenda, and it all starts with a conversation.

Keep an eye out for the second edition of the TRADETech Daily publication featuring all of our coverage from TradeTech 2018 coming soon.