The road to a brighter future ?
We live in a world where having the right data at your fingertips is more important than ever . As software continues to become ever more sophisticated , it becomes possible to analyse the world in ways that were once in the realm of science fiction . The challenge on the buy-side is to translate that potential into practical applications that can help the trading desk to outperform the competition . In this issue , Yann Couellan , head of fixed income trading France at AXA Investment Managers , talks about the ways in which tools that bring together data analysis both pre- and post-trade can help the trader make better trading decisions ; meanwhile , Kent Rossiter , head of trading Asia at Allianz Global Investors , shares his insights on the ways in which trading desks around the globe are facing the challenges of handling multiple asset classes , finding liquidity in uncertain times , and facing the obstacles and changes posed by global regulation .
This month also sees the summer solstice , the time of the year when the sun is in the sky for the longest number of hours . It is fitting , then , that this issue also shines a light on some of the regulatory changes that are taking place as European regulators seek to spell out in ever-greater detail the shape of markets in equities , fixed income and FX derivatives as part of the upcoming MiFID II legislation . In the news section of this issue , you can find a brief update on ESMA ’ s progress towards implementing the European Commission ’ s ambitious goals . Of course , regulatory changes are not just a European concern . The first quarter has seen significant developments in Asia as well , most notably in Hong Kong , where the authorities have been investigating the possibilities for the introduction of an investor ID scheme that may potentially identify the end-investor for each transaction . At time of going to press , the final details have yet to be resolved , but the development looks set to be one to watch in the near future . Meanwhile in Japan , the country ’ s FSA has been investigating dark pools and high-frequency trading – a reminder that while sophisticated technologies are becoming ever more ubiquitous , debate about their proper role and function and the balance with more traditional market elements remains as furious and unabated as ever . Over the last few weeks , further insights have been delivered through K & KGC ’ s ongoing surveys into electronic bond liquidity initiatives , block trading in equities , and FX trading technologies and organisation of the trading desk . Notably , those on the cutting edge of the buy-side are now using algorithmic tools in FX more than ever before , with dramatic impact on the way trading is planned and executed . While sophisticated electronic execution in FX may be a minority activity today , it might just be the future . To find out more , turn to our section summaries for each asset class . In keeping with the uplifting spirit of this month ’ s issue , this month also sees the 233rd anniversary of mankind ’ s first ever recorded flight – on 5 June 1783 , the French brothers Mongolfier conquered the sky with the world ’ s first hot air balloon , which ascended to an altitude of around 2,000 metres . A timely reminder , then , that technological progress has long been a part of the human condition . As the economist John Maynard Keynes wrote in 1976 , “ ideas shape the course of history ”. Whether it is the increasing proportion of algorithmically traded orders in the market , the increased sophistication of TCA and market data tools , or the latest data-driven analysis models that allow the buy-side to make the best choice when selecting a counterparty , or even the venue that the trade takes place upon , we can be certain that further changes and discoveries lie ahead . We hope you enjoy this issue , and look forward to seeing you in our upcoming debates in London on 8th June , Boston and New York on 14 & 16 June , Germany on 20th September , Paris on 22nd September and throughout the rest of the year .
Elliott Holley Head of Global Buy-side Research
eholley @ kandkgc . com + 44 ( 0 ) 7759 476779
June 2016 www . buysideintel . com
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