Buy-side Perspectives Issue 14 Special edition | Page 8

manner they’ll look to increase their
use of automation using tools like
ours.
How does a buy-side investment
firm looking at automation begin to
address that challenge?
We’re seeing a significant
increase in analytical activity
for the buy-side to understand
the quality of the execution
relationships they have with their
counterparties and then applying
that analysis to the active
execution via automation tools.
The buy-side is currently using
technology in two ways: one is
automation, and the other is what
drives that automation, which
is the analytical side of trading
activity with counterparties. We’re
seeing a significant increase in
analytical activity for the buy-side
to understand the quality of the
execution relationships they have
with their counterparties and then
applying that analysis to the active
execution via automation tools.
So, if an investment firm takes on a
significant new mandate for example,
it does not need to scale up with
human traders at the same rate
as before, but use automation to
bring optimize the trading process.
This approach of complementing
humans with machines can result
in measurable productivity gains
for the firm. Automation augments
the ability of human traders, who
can redirect their time to high-
touch orders and more profitable
relationship-building tasks.
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Where does trade automation come
into to play and what is the biggest
challenge in taking an electronic
trade to an ‘automated’ electronic
trade?
It’s important to choose the right
automation product to support
the business’s trading strategy. The
software needs to have access to the
numerous datasets a human trader
would use to make decisions, and
allow them to map this data to highly
flexible rules that respect the nuances
of the product being traded – be it FI
or FX.
The solution needs access to real time
Automation is a natural evolution of
counterparty pricing information
performing a process electronically,
and any metadata around that price
and is a manifestation of the
like time to quote and characteristics
efficiencies that the buy-side is
around firmness. It would also want
always looking to gain. The benefits
to understand which dealers are
are numerous, such as reduction
axed on that position, the quality of
in errors, ensuring best execution
that axe, and that dealer’s activity in
is always met or capturing market
general in that sector.
opportunities faster but the largest
by far is the trader bandwidth
it frees up that can be
The benefits are numerous, such as
subsequently reallocated to
reduction in errors, ensuring best
other activities.
execution is always met or capturing
market opportunities faster but the
largest by far is the trader bandwidth
it frees up that can be subsequently
reallocated to other activities.
The challenge in moving
from electronic trade to an
automated electronic trade
is the need for the buy-side
to have confidence in the
automation tool they’re using, and
be able to understand the logic it
applies in order to execute trades.
This is why our solution is fully
modular and rules-based so a firm
can compose its own rules against a
wide variety of variables; in essence
all the market data points which are
accessible via Bloomberg.
As buy-side firms continue looking
for ways to interact with liquidity
in a more efficient and productive
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Finally, the product needs to satisfy
other stakeholders in the buy-side
firm such as risk and compliance. It
has to demonstrate that the trader
is in control of the automation tool,
and that he or she has visibility
throughout the entire process which
can also be demonstrated by a
complete readable audit which shows
what decisions were made and why.
Those were our considerations in
building Bloomberg’s automated tool.
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