Firms must walk the fine line between specialism and standardisation in order to access aggregate benefits across multi-asset trading, panellists argued at TradeTech Europe 2024.
“Specialism is there because it gives you an edge. Standardisation is there because it allows you to scale well, run a larger footprint in terms of trading with less people, and make changes much easier,” noted one panellist.
“The question is how complex do you want your business to be versus how easy you want to be able to adapt. It’s all about balance and we spend a huge amount of time thinking about that problem and how we want to navigate it.”
Data, which is becoming increasingly essential to the trading desk, is another area in which multi-asset trading could benefit from standardisation, particularly in the realm of data management, controls and governance.
The challenge of data ownership was also addressed, particularly with multi-asset shops in which various datasets could belong to different areas of the business and/or individuals.
“With data, you would assume it is owned by the trading desk, but if you look at it closely, there could be static data from portfolios underneath, there’s static data from the instruments you’re trading, etc. So figuring out who’s actually in charge of a particular data set can be quite challenging in large organisations,” said one panellist.
Among the key themes discussed during the panel was the usage of multiple systems within one organisation and the benefits and drawbacks that could result from this.
Some panellists noted that having one system in a firm can be beneficial as it means that the entire organisation will ‘speak the same language’.
“In order to run a successful trading desk, particularly multi-asset, finding common sense and common standards is essential,” noted one panellist.
Panellists highlighted that with standardisation, you may lose flexibility. However, it was noted that despite the lack of flexibility, one benefit is the stability when opting for standardisation.
Said stability – caused by a lack of managing multiple different interfaces – can lead to more consistent outcomes, argued panellists. Meanwhile, specialism could bring benefits such as in-depth knowledge, improved efficiency, consistency and adaptability.
Elsewhere in the discussion, panellists discussed the evolving requirements for new appointments within their organisations, particularly related to multi-asset needs.
Panellists highlighted the increasing need to understand data, code and expected qualities such as good mathematical skills and quant abilities.
“Technology will drastically change approaches and we have to adapt appropriately to cope,” concluded one panellist.