THETRADETECH DA I LY
key takeaways
THE OFFICIAL NEWSPAPER OF TRADETECH 2019
THETRADETECH DAILY
However, there are those on the buy-side that
believe that AI will become a necessary part of
trading and that underestimating this require-
ment will be a fundamental mistake (see page
16). Clearly the industry is awoken and alert to
the benefits that AI and machine learning can
bring to trading beyond simple automation pro-
cesses, but it will be case of good things coming
to those who wait.
Buy-side still grappling with the data
Similarly to the potential around AI, the buy-
side is finally making in-roads into extracting
value from the vast quantities of data that is
available to them. This has been a historical
issue for asset manager, at least compared to
their sell-side counterparts that have larger
budgets and teams to dedicate to this, but
firms have been making strides to source new
data sets and dig into those sets already avail-
able to them to improve trading performance or
seek out new opportunities.
More asset managers are now hiring data
scientists to work with their trading teams to
provide greater insights to the desk for both
in-trade and post-trade, while the importance
of data analytics is also growing. However, the
caveat to this is the struggle to not only acquire
the human expertise, but to retain it – a chal-
lenge not just restricted to the buy-side.
Alternative data – such as social media feeds
and blog posts – has been held up as one of the
TAKEAWAYS
TradeTech 2019: The key takeaways
THE RISE OF ARTIFICIAL INTELLIGENCE AND NEW DATA SETS DOMINATED DISCUSSIONS AT THIS YEAR’S CONFERENCE,
WHILE BREXIT CASTS A LONG SHADOW OVER FUTURE PLANS.
T
his 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 across the two days in Paris.
With the arrival of MiFID II now seeming like a
distant memory (for some), the industry is look-
ing to the future, and it was of little surprise
to see that artificial intelligence and data were
again some of the main talking points through-
out the event. Buy-side firms have clearly
jumped on this train with gusto, but are still
cognisant that changing market structures and
6
THETRADETECH DAILY
the great unknowable of Brexit mean nothing
can be taken for granted.
Whether you attended and stayed until the
very final session or were unable to make it
Paris this year, here are some of the key talking
points from this year’s TradeTech event.
AI will transform the industry, just not yet
Artificial intelligence (AI) was once again one
of the key topics of discussion throughout the
conference, a continuation of last year’s trend,
although now the excitement has been damp-
ened by a sense of realism about how much
work participants must put in to these technol-
ogies before seeing quantifiable results.
Automation of manual processes has been
a staple of trading processes for some time
now, but advances in machine learning are
undoubtedly opening new possibilities for buy-
side firms. Speakers across several panels and
interviews on the subject outlined their own
projects with these technologies, but the mes-
sage that significant investments of resources
and time are unavoidable and that firms must
be prepared to play the long game came across
loud and clear.
key takeaways
more lucrative new data sets for the buy-side to
dig in to, but, much like any emerging technol-
ogy, those that have been working in this area
for years have had to warn asset managers
that this is no silver bullet and that significant
investment in this space will be necessary to
derive the greatest value from it.
MiFID II is now just another fact of life
Last year’s TradeTech conference found that the
industry had, for the most part, accepted the
new regulatory regime and were adapting their
processes accordingly to adjust to the new trad-
ing environment. There were of course some
contentious opinions thrown around, particularly
concerning new trading venues such as periodic
auctions and systematic internalisers.
This year, on stage at least, there was little by
the way of controversy to be found at the event.
For the most part, buy-side firms have acclima-
tised to the new regime and are now cracking
on with the task at hand – optimising execution
strategies, reducing cost pressures and wringing
the highest possible value out of investments in
technology.
It was left to the trading venue operators to
continue the fight against regulator’s aims to
move liquidity and trading onto lit venues (see
page 14), although the rise of periodic auctions
and systematic internalisers so far under MiFID
II has gone some way towards alleviating that
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THE OFFICIAL NEWSPAPER OF TRADETECH 2019
How this trend will continue will be interesting
to watch play out, but for now, the majority of
the industry is clearly more focused on getting
back to the daily tasks at hand.
Shifting market structures mean Brexit is a big
cloud on the horizon
The big cloud hanging over this year’s confer-
ence was, of course, Brexit. The question in the
weeks leading up to the event was whether the
UK would have fulfilled its objective of leaving
the EU by the end of March (and then mid-
April) and how that would be addressed by the
speakers.
With Brexit’s delay, market participants still
find themselves in a state of limbo, having to
enact certain contingency plans early and put
other strategies on ice until a sense of clarity
emerges. The shifting market structures, partly
resulting from the introduction of new regulato-
ry regimes, means that many market partici-
pants are simply treading water for now, aiming
to get through the headwinds as best they can
while making incremental improvements to
their trading processes and technology stacks.
A keynote address on the topic of Brexit by
provided a number of insights into the political
process and how it affects wider economic
activity, but when it came to how the event of
Brexit will directly impact the capital markets
in the here and now, the answer could only be
summed up in a baffled shrug.