2013 Offers Both Familiar and Fresh Challenges
Naturally, regulation is still the hot-button topic. Swap data repositories in the US began publishing pricing and transaction information from New Year's Eve, and most of the major banks have provisionally registered as swap dealers, under Commodity Futures Trading Commission (CFTC) rules. This year, the Securities and Exchange Commission (SEC) is going to have to power through its rulemaking to catch up with its sister agency, while chatter of merging the two continues to hum away in the background. In Europe, further moves on derivatives reform are likely, while the Target2-Securities (T2S) project, already weakened by the lack of UK participation, is most likely going to have to revisit its operating cost model again.
Settlement times, of course, will continue to be conversant. The discussion is starting again in the US following studies on the topic, and a need to come into line with the rest of the world, particularly Europe, where T+2 is mandated by the Central Securities Depository Regulation (CSD Reg).
Technology, of course, will continue to be both a facilitator of business and a challenge to it. We may not see the rampant reduction in trading times of recent years, with many people starting to postulate that high-frequency trading (HFT) has reached, if not a nadir, then a plateau of sorts. However, connectivity and the use of multi-asset strategies, across multiple venues, will be important. Moreover, 2013 will likely become the year of analytics, with in-memory technologies becoming increasingly prevalent and sophisticated, and more intelligent algorithmic strategies seeking returns through a cerebral use of data.
Cloud will continue to make its inroads, having become a quietly enlarged technology over the past year. As a recent contributed article in Waters noted, the burgeoning costs of retaining separate exchange licenses and technologies, compute power for increasing volumes of data and other areas are pushing hosted services into the front office, where previously none dared to tread.
Shrinking the Pool
Vendor consolidation, and indeed, institutional consolidation are likely to be of import. NYSE/ICE's sudden announcement just before Christmas kick started it, but the fact of the matter is that there are a lot of fish in a small pond that's only shrinking. I remember having several discussions with people about this last year, and the major acquisitions are beginning to seep through─Redkite and NICE Systems is just one example. On the sell side, I believe the major bank landscape will remain unchanged, but pressure on brokers through financial avenues due to shrinking margins, or unexpected calamities such as Knight last summer, will alter the make up here. Moreover, the UK regulatory landscape is due to change dramatically, with the division of the Financial Services Authority into the Prudential Regulatory Authority and the Financial Conduct Authority.
2013 will likely become the year of analytics, with in-memory technologies becoming increasingly prevalent and sophisticated, and more intelligent algorithmic strategies seeking returns through a cerebral use of data.
Naturally, other factors will have an impact, and this is by no means an exhaustive list. As always, drop me a line if you see any big features for 2013 that we should be keeping our eyes on.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
DSB says industry is ready to meet UPI mandate ahead of deadline
The Unique Product Identifier will be required for certain OTC derivatives in the EU at the end of April, following US adoption in January.
‘Very careful thought’: T+1 will introduce costs, complexities for ETF traders
When the US moves to T+1 at the end of May 2024, firms trading ETFs will need to automate their workflows as much as possible to avoid "settlement misalignment" and additional costs.
Court case probes open-source licenses as movement stands at crossroads
The Software Freedom Conservancy’s lawsuit against TV-maker Vizio begins trial in California, raising questions about open-source licenses and the risks posed by adhering to them.
Waters Wavelength Podcast: Countdown to T+1
DTCC’s Val Wotton joins the podcast this week to discuss the impending move to T+1 in the US.
Consolidated tape hopefuls gear up for uncertain tender process
The bond tapes in the UK and EU are on track to be authorized in 2025. Prospective bidders for the role of provider must choose where to focus their efforts in anticipation of more regulatory clarity on the tender process.
Fighting FAIRR: Inside the bill aiming to keep AI and algos honest
The Financial Artificial Intelligence Risk Reduction Act seeks to fix a market abuse loophole by declaring that AI algorithms do not have brains.
Waters Wrap: The rise of AI washing… and regulation washing?
The SEC recently levied fines against two investment advisors over “AI washing”. Anthony takes issue with the announcement.
Prepare now for the inevitable: T+1 isn’t just a US challenge
The DTCC’s Val Wotton believes that firms around the globe should view North America’s move to T+1 as an opportunity—because it’s inevitable.
Most read
- Deutsche Börse democratizes data with Marketplace offering
- Sell-Side Technology Awards 2024: All the winners
- Sell-Side Technology Awards 2024: Best sell-side front-office platform—Bloomberg