As 2016 draws to a close, John takes a look at some of the best analysis articles published on Buy-Side Technology over the course of the year, taking in the growing interest in machine learning capabilities, how asset managers are diversifying investment portfolios and what that means for technology offerings, and the looming specter of Mifid II.
Blockchain has been the hype technology of 2016 and the sell side has formed the majority of the vanguard for its development, with the buy side content to sit on the sidelines for now. Rob Palatnick, DTCC chief technology architect, spoke to WatersTechnology about why he thinks the blockchain space has already become saturated with collaborative projects that lack a clearly defined directive. As he put it: "Everyone is doing their own little private experiment, which is the exact opposite of what the technology is all about."
Dark pool trading has been on the regulatory radar for some time as the powers that be continue to drive trading towards more transparent venues. It was no surprise then to see several banks fined significant amounts for misleading investors over how Barclays' and Credit Suisse's respective dark pool trading venues operated. WatersTechnology spoke to several industry sources in the wake of the announcements and found that the SEC's Regulation ATS overhaul could be impacted by such large fines.
Machine learning has been another hot topic this year and at this year's North American Trading Architecture Summit the C-level panel explored the technology's development and application. Many asset managers are exploring the possibilities that machine learning has to offer, and the panel signalled out compliance as one key space where process automation can be improved through these technologies. Machine learning was also a key discussion point at other Waters' events this year, including the European Trading Architecture Summit and Waters USA.
The asset management community has historically struggled to cope with increasing volumes and complexity of data, a problem only set to grow due to new regulatory demands. Cloud-based technologies can be the breakthrough the buy side needs, according to Mariner Investment Group CTO Henry Kravchenko, who said that by taking advantage of software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS) third-party offerings the firm has been able to blend that with legacy technologies, rather than conducting large-scale replacement projects.
The buy-side's appetite for greater yields in more complicated asset classes is only set to grow, which means trading technologies must be able to cope with the increased demand. Fresh from a spree of acquisitions in 2015, SS&C Advent rolled out a number of new and upgraded products throughout 2016 as the vendor sought to provide the tools that asset managers require, with a particular focus on SaaS, user experience and multinational reporting functionality.
A change in any firm's business model is going to cause headaches, and Ativo Capital Management's move away from advisory practices is no exception. Focussing purely on asset management meant a multi-year project to replace legacy systems in both the front- and back-office. Those involved in the work at the Chicago-based firm spoke to WatersTechnology to lift the lid on its new technology stack and ambitions to grow its assets under management fivefold.
One of the more intriguing acquisition stories of the year has spread consternation across the industry, particularly for users of Barclays' Risk Analytics and Index Solutions (Brais) solution, which was acquired in September by Bloomberg. Participants across the industry, particularly in the fixed-income space, have voiced concerns around whether the integration of the two systems will ultimately have any great benefit or will lead to increases in data fees. Bloomberg has moved to quell these fears, although the data giant has some way to go before the implementation is completed.
If there has been just one major headache for the buy side this year, which may be putting it very generously, it has been the impending arrival of Mifid II. Despite a one-year reprieve, the regulation will be coming into play in January 2018, but some in the industry, such as Oliver Grimsdall, IT manager at Franklin Templeton Investments, are still hoping for a further delay. "I'm praying for it," Grimsdall said at this year's North American Trading Architecture Summit, and it may be a safe bet that there are others out there with a similar opinion.
Agile is not just for the start-ups or smaller investment firms; that was the message from Schroders' CTO, Stewart Carmichael, during his keynote address at this year's European Trading Architecture Summit. Carmichael summarized how the asset management firm is positioning itself to utilize Agile methodologies to drive both its business strategy and technology expansion, as the 213 year-old firm seeks to change the pace of its IT development and introduce a greater degree of standardization across its operations.
Fresh from his move to UK-based asset manager City Financial, Lou Thorne, the firm's newly appointed global COO, talks to WatersTechnology about how he plans to build out the firm's technologies across its entire stack. New hires, the build vs. buy debate, and finding the right vendor partners are all on the agenda for Thorne.