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remains a vital market in Europe and any divergence presents a major challenge to participants from across the spectrum . Next year , the Mifid review will come into sharp focus – as the EU looks to shore up aspects of the regulation while maintaining its competitiveness not just with the UK , but globally . We can also expect a debate around what an effective consolidated tape looks like – there is a huge opportunity to grow secondary markets – but the success of the tape will depend on the proposals put forward by the EU . Market participants will be keeping a close eyes on the regulatory debate in Europe and whether it will bolster market structure or fall short . Hayley McDowell , EU equity electronic sales trader , EU market structure consultant , RBC Capital Markets
The volatility and volumes of the past year have only underlined the fact that technology is the difference maker when it comes to navigating modern markets . Disparate systems built on legacy technology are not fit for purpose and trading desks require consolidated , multi-asset systems to be able to achieve better results and operational efficiencies . As the market continues to evolve , so too must the underlying technology . Liquidity , risk management tools , and trade analytics will be front of mind going into the new year for managers . Traders will have to navigate constantly evolving markets , high inflation , and rising interest rates . We expect a major shift towards hedging strategies to mitigate the turbulence in the markets , and desks that don ’ t have the right underlying EMS technology , particularly the capacity for electronic fixed income trading , will face a significant disadvantage . Fixed income trading has long been tied with legacy processes , but with a hangover of tight liquidity in bonds expected into next year , we expect the industry push the electronification envelope next year . Andrew Morgan , president and chief revenue officer , TS Imagine
Innovation and efficiency will continue to grow apace , but 2023 will see a move to higher quality information with smart filtering to eliminate “ noise ”. The decades-long journey from analogue to digital finance has resulted in cash evaporating from our lives - making transactions faster , easier and cheaper . The same process is transforming fixed income . The past 20 years has seen markets embrace electronic dissemination of information . We are past the tipping point of having too much information , and because it is blindly delivered the quality of it doesn ’ t have to be high . Initially , it was about quantity to promote dialogue , but now tools exist that allow market participants to better control and target the information they are sending . As more users and markets embrace new capabilities , participants will better filter what they consume and promote to individual users . The role market makers play will also change , and we will continue to see an evolution in how trading desks operate . The adoption of distributed ledger technology ( DLT ) and artificial intelligence ( AI ) and other new technologies will accelerate the move to quality from quantity . From a trading perspective , the market has all the protocols that it needs . There will be a move to request for stream ( RFS ) for the more liquid part of fixed income markets , continuation of RFQ for medium liquidity areas and bilateral negotiation for less liquid ; because participants will have high confidence that they are in a true negotiation based on improved pre-trade insight . New technology will continue to stimulate transparency , drive efficiency and create volumes in parts of the market it has opened up . Dom Holland , UK head of sales , LedgerEdge
Rising operational costs , heightened market volatility and increased regulatory burden
90 // TheTRADE // Q4 2022