K & K G L O B A L C O N S U LT I N G
RESEARCH
Business
processes &
technology
Key takeaways from 1H 2017 Alpha Trader Forum (ATF) regional buy-side debates:
Areas of business processes that has drawn the
attention of heads of trading is the trader’s choice
of counterparty for each trade and whether there
is a need to remove the possibility for bias? Do
the traders understand how to correctly use the
algorithms and let them perform its objectives?
Is there a need for automation to ensure that
choices are made based on proven performance
instead of subjective gut-feeling? Some buy
side thought leaders argue that a well optimised
machine will perform better than the human in the
long run, at least for low touch types of trades.
A major challenge within the fixed income asset
class is the increasing fragmentation of liquidity and
how to prove best execution. Traders are manually
collecting quotes and market data from multiple
sources for each deal to prove their due diligence
around each trading decision. This proves there
is a strong need for an aggregation technology,
Summer 2017
such as an execution management system ("EMS"),
to make the job easier by consolidating reference
prices with time stamps to reduce administration.
Within foreign exchange it is interesting for the buy-
side to understand how they can start to leverage
non-traditional liquidity sources and smarter
pre-trade TCA systems. Will all banks sign up to the
Global Code of Conduct?
A core part of the discussion, relating to business
process change, is the choices of trading
technologies including EMS and OMS (order
management system). Should you opt for one
central solution or best-of-breed and is it important
to go for an independent solution? What if you were
asked the question by your auditor “what type of
due diligence did you do in the selection of your
technology for this asset class?”. Answers of which
all require some deep thought and tough decision
making.
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