The Buy Side Shines at NATAS

Waters' first conference of the year went swimmingly. Here's a recap.

When it rains, it pours ... usually on the day of a Waters event.

While the weather didn't quite cooperate—as usual—the North American Trading Architecture Summit, or NATAS, kicked off our conference season in fine fashion. Tim recaps the day's many events.

It's a running joke among our editorial staff that whenever our editor-in-chief, Victor Anderson, flies over from London for one of our conferences, the lovely weather for which England is known comes with him.

Though it wasn't a total washout for NATAS this week, the morning was quite sultry and we did get a passing shower as delegates and journalists arrived. So the tradition lives on. Thankfully, the show itself was much brighter.

The cool thing about the North American Trading Architecture Summit, as its name implies, is the depth of the hardcore technology discussion around development and infrastructure we hear, as panelists wade into the weeds a little more than at other gatherings.

The event's heritage is sell side — thus the green livery, as opposed to BST's orange—but lately we've seen the buy side jump into the mix quite a bit as well, and 2015's edition was no different.

To wit, four out of five chief technologists on the morning C-level panel came from investment managers: Blackstone, Marathon, Vanguard, and Lord Abbett. A further sampling: the risk management panel featured CROs from a pair of buy-side shops in Prologue Capital and Lazard AM, and yet another two representatives from MetLife and Neuberger Berman were in on an earlier discussion about flexible enterprise infrastructure. No shortage of representation, then.

Panoply of Issues

We'll be rolling out more reporting on the day's panels throughout the week, but for now, a few quick reflections. For one, when I asked the aforementioned C-levels about the Bloomberg outage last Friday, I was a bit afraid the tech giant (also a gracious sponsor of the event) would be unnerved.

Instead, I think the panelists' responses must've been comforting. Their sentiments seemed pretty uniform: a) lining up an alternative to Bloomberg is a costly enterprise that many firms are simply willing to live without, occasional outage or not, and b) if the AIM OIMS goes down in your shop, it's most likely down almost everywhere. As one panelist said, this is a definite problem for major market makers who have to be up and ready all the time. But a buy-side trader can almost always get his or her trade done later.

Another interesting issue was raised in a panel about the confluence of two big industry bugaboos—big data and high-frequency trading.

That discussion delved into parametric equations and the puzzle of compressing two gigabytes of data in microseconds ensure very fast systems are trading on fresh information. The takeaway here? Vendors can do more to furnish big data applications for this always fickle space.

A Squeeze, But With Opportunity

And a third thing that seemed to pop up frequently was the looming Basel III-related squeeze that investment banks and, potentially, several fixed income markets are about to experience.

One audience member suggested we're heading for a liquidity crisis as a result; a panelist similarly said she wouldn't be surprised to see certain markets lock up later this year as well, with banks now forced to charge the buy side to store cash overnight, and no longer accepting that cash as collateral, potentially forcing a run on treasuries.

What's interesting about all this is that it wasn't really fear-mongering. Rather, these possibilities were mentioned in the context of technology opportunities, from evolving all-to-all trading platforms for cash markets to strategic legging engines for principal trading desks and buy-side client facilitation, and fine-tuning collateral optimization and portfolio compression tools.

Much of the day's chatter was thought-provoking, and we're quite happy that so many buy-side representatives were able to lend their knowledge and opinions to the event. So surely stay tuned as more content from NATAS unfolds.



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