[ A D V E R T O R I A L ]
world of information overload,
the ability to crunch this data by
exception and deliver actionable
insights in a visual manner straight
to the buyside trader’s desktop will
provide asset managers and port-
folio managers with a whole new
level of empowerment.
The evolution of technology is
being driven by buy-side demand
post-MiFID II; how can you antici-
pate their requirements?
MP: We have a clear perspective
on the marketplace, enriched by a
deep understanding of our mem-
bers, their workflows, and what
they need. In our Liquidnet Labs
we constantly evaluate innova-
tions that may be relevant to them,
assess the opportunity globally and
prioritise roll-out based on rele-
vance and member feedback.
SS: Post-MiFID II, there is no
one-size-fits-all; you can’t have
one generic fix which suits every
asset manager. It’s up to us, on
the buy-side, to identify issues
and go to trusted vendors we can
work with, given the complexity
of our internal infrastructure and
the flexibility we require from our
partners.
How do you see the challenges and
opportunities over the next 18-24
months?
SS: I believe that the current
European market structure isn’t
anywhere near what a post MiFID
II world is going to look like from
an execution standpoint. There are
still many moving parts which are
going to materialise over time in-
cluding the growth of new venues
and platforms and the evolution of
the SI regime. We just need to en-
sure we understand it and feed that
information and decision-making
into our investment group, to
continue to execute in an efficient
20 // TheTrade // Summer 2018
manner.
Analytics is critical towards
meeting MiFID II transparency
requirements. We’re starting to get
good sized data sources which are
feeding into our overall process
and enrich our counterparty con-
versations. I expect to see a further
evolution of this journey over the
next 12-18 months.
MP: Regulation will be the driving
force, but it is then down to indus-
try participants to create a better
market structure by introducing
“It’s not just about
extracting value when
you’ve got orders on
the desk, it’s also
about finding liquidity
when you don’t.”
competition, focusing on best prac-
tices and looking at where value
exists. Whether you’re a FinTech
or a traditional business, you have
to be able to improve the efficiency
of the marketplace for everyone’s
benefit, but specifically the end
investors and pension funds.
How will technology evolve to sup-
port buy-side trading desks?
SS: Despite words like ‘artificial
intelligence’ (AI) and ‘machine
learning’ being bandied around in
our industry we are not looking to
replace traders with machines. Far
more importantly, we want to use
technology to enhance our traders’
capacity and take these concepts
and consider how they can be
added to our workflow, our trading
desk and our group. Embedding
these into your workflow is always
the biggest challenge.
MP: AI is a definite buzzword
for the industry at the moment.
Liquidnet is using artificial intel-
ligence within our Virtual High
Touch suite to help distil vast
amounts of data into actionable
insight tailored to every order on
a trader’s blotter. But in a MiFID
II world, it comes back to en-
abling the trading desk to position
themselves as a major alpha centre
within the organisation. This has
always been Liquidnet’s position.
We are providing tools to make
that happen; to make the alpha
collection process of the PM more
efficient, which ultimately results
in better performance.
Change is primarily being driven by
regulatory initiatives; would these
changes have occurred without
regulatory intervention?
SS: The move towards greater
transparency and reliance on data
to enrich and validate our deci-
sion-making would have happened
without MiFID II. We were already
on that path because we already
viewed trading as a key part to our
investment process and an area
where value can be both added and
preserved. But MiFID II has accel-
erated the process, certainly from a
European perspective.
MP: Certain aspects that are
healthy for the industry - such as
unbundling and the separation of
research and execution - would not
have happened without regulation.
MiFID II is accelerating a chain of
events which has global conse-
quences, not so much with the
regulators in other jurisdictions,
but the end investors – trustees
and pension funds. Because at the
heart of it, that’s what MiFID II
is driving towards: best-practice
investment services to benefit insti-
tutional investors and their end
clients – our parents, grandparents,
children, and indeed ourselves.