TCA, shrinking budgets, outsourcing and regulation dominated this year's Trade Tech.
London's Docklands isn't the most vibrant hub of hue and color at the best of times, but the sheeting rain that enveloped WBR's Trade Tech this year lent a poetically desaturated feel to the austerity in evidence. If you looked past the typical quaffing of champagne, the buckets of beers and the wine on offer at various booths (the uncorking of which seems to get earlier and earlier), it's clear that everyone's budgets are under pressure across the board.
With this in mind, it's no surprise that cost-saving measures are coming to technology, and that was probably the biggest theme that I encountered this year. Vendors are stepping in to offer services to cash-strapped institutions that have woken up to the fact that their in-house infrastructures are, quite frankly, outrageously expensive. It boils down to a simple analogy, one CEO of a technology company told me, late on Wednesday. If you can buy a bicycle from someone who will assemble it, deliver it to your house with bells and whistles attached for £100, with the ability to upgrade the parts as and when you want to, why would you pay £200 to put it together yourself, and have to collect it instead? Slightly clumsy, perhaps, but the point remains.
An Eye on the Ledger
The other big thing that I kept hearing from people on both the buy and sell sides was transaction-cost analysis (TCA). Having been around in equities for a while, people are beginning to diversify across foreign exchange, fixed income and other areas as well, and it's down to a number of factors. Pressure from the buy side is one driver, where efficiency in execution and process is becoming paramount. Without sounding like a broken record, people can't just throw money at something until it works, any more. In other ways, it's becoming a competitive differentiator for brokers ─ look how good our execution is, here are the numbers to prove it. TCA is still relatively young, and although companies such as ITG are just beginning to test and release their offerings, it's not long before it snowballs.
Data, co-location, latency, field-programmable gate arrays and regulation, of course, were all on the agenda. What really struck me, though, talking to so many people over the course of the event, was that there's a sense of forward motion beginning to build.
"It's not that surprising," said one remarkably young futures trader who I spoke with towards the end of the second day. "People know what the big regulatory changes are now, there's not the wait-and-see approach, and although it's still somewhat vague there can be plans put in place. There's been a shift in thinking as well, moving out of denial and into a sense of being proactive so as to avoid future shock." Moves such as the centralization of standard data components, like the SIX/OneMarketData deal would seem to bear this out. We talk a lot in these pages about how the current of conversation in the financial services industry is cyclical. It's something of an in-joke that, yes, we were talking about this two years ago, and now we're talking about it again. A knowing wink and a playful jab on the arm, with each of us secretly sighing over the fact that we'll probably be having this same discussion next year as well. That, it seems, is beginning to change.
For those of you who perhaps haven't seen the announcement with all of the week's comings and goings, Waters has also opened the polling for our annual rankings. Please do get involved ─ it's your input that makes it such a special event each year. You can find more information and the voting page here.
As always, if you have any comments to make, please feel free to call me on +4420 7316 9811 or send an e-mail to firstname.lastname@example.org.