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Trading data and tools after COVID-19
Head of buy-side trading at Refinitiv , Quentin Limouzi , considers how trading data and tools employed during the COVID-19 crisis can help traders continue to manage risk and compliance , and spot new investment opportunities .
The impact of the COVID-19
pandemic on financial markets has left many traders feeling like they are flying blind .
They are dealing with high levels of market volatility and evaporating liquidity , resulting in record volumes of trading . Even with some hints of improvement , no one really knows how long this crisis mode will last . But it does signal a new era dominated by price-driven trading .
From passive to active trading It ’ s a traders ’ market .
There are lots of opportunities to trade not just on fundamentals but also on price . As a result , we ’ ve seen trading move away from primarily passive investments to more actively managed funds .
The reason : The agility and flexibility of active management is more equipped to handle market volatility and give traders an edge .
This traders ’ market is characterised by a shortened holding horizon , for example , when a stock falls 60 % and then afterwards bounces 35 %.
It allows an active trader to get in and out of a stock multiple times in the span of a few days or weeks , rather than relying on mid- to longterm projections and fundamentals to decide whether to trade long or short .
It ’ s important to buy and sell what ’ s right – right now . This means having the appropriate data and tools to respond when the opportunity arises .
How can trading data and tools help ? Because of the volatility , our clients saw more than double the usual trading over our Refinitiv
REDI execution management system ( EMS ) platform in March , at the peak of the crisis .
“ It ’ s important to buy and sell what ’ s right – right now . This means having the appropriate data and tools to respond when the opportunity arises .”
Quentin Limouzi , head of buy-side trading , Refinitiv
The ease with which traders were able to manage risk , compliance and new opportunities in the disrupted environment signals a new era . So , even when the world gets back to their offices , it ’ s likely that many of these shifts will become the norm .
32 // TheTRADE // Fall 2020