Jupiter Asset Management, the London-based, LSE-listed investment manager with assets under management of around £47.4 billion, recently promoted former head of fixed income Mike Poole to run its trading desk. He sits down with The TRADE to discuss his career to date, his strong feelings about the future of trading – and the direction in which he’d like to steer the firm he has called home for the past 17.5 years.  

Learning the ropes 

Poole joined Jupiter back in March 2005 as a lowly dealing desk assistant. “We’d just taken on our OMS for the first time, so it wasn’t quite paper tickets, but we weren’t far off.”  

His job was to help the equity traders sort out queries, listen in on phone calls, and assist them with the organisation of elements such as IPOs and secondary offerings. “We used to have a big white board in the office, and I would put up all the information to make sure the fund managers could see. A collaborative effort has always been a big part of the trading floor here, and my job was to grease those wheels.” 

“When it comes to trading, you listen in, you learn how it goes, and you learn the etiquette. That’s the key thing about a place like Jupiter – it’s all about the etiquette.”

He saw quickly that the two-way communication between traders and fund managers was vital, and as a desk junior without any real execution experience, just wanted to take it all in. “It was information by osmosis. When it comes to trading, you listen in, you learn how it goes, and you learn the etiquette. That’s the key thing about a place like Jupiter – it’s all about the etiquette. How you’re seen, not just by internal stakeholders like fund managers, risk, compliance, but by external parties:  sell-side, brokers, ultimately clients. For example, speaking to a counterparty and taking them short $5 million-worth of risk, and then calling another counterparty because you know they’ll short you the same security, and then doing that again and again, and everyone is trying to cover the same stock – you’ll get a pretty bad reputation quite quickly in terms of how you engage with risk provision and balance sheet. It goes back to partnerships. If someone has shown you something, or you’ve sold them some risk, allow them to get out of that. Understand the market. I learned very quickly how to get a good feel for how our traders did good business, and that is something that has continued throughout my career.”  

Poole started off by helping his fund managers set up program trades and found those discussions with the PMs notably helpful in terms of understanding portfolio construction: “What it is fund managers look at, why they look at it, what they expect from us, and how we can deliver it in terms of value.” 

Jupiter also used to have quite a significant private client business, and Poole did much of the trading for that, ranging from very large stocks to AIM-listed micro caps, which was a good way to learn the ropes of pre-Mifid 1 market structure.  

“Liquidity was probably more abundant, but in those spaces you really had to understand who was doing what, and why they might be positioned like that. I spent a lot of time on the phone, to be honest, really getting a feel for the market, and that stood me in good stead for the next step in my career progression.” 

Credit crunch 

But then the financial crisis hit. Program trades dropped off, because people weren’t trading risk. Private clients weren’t trading as much, because there wasn’t as much to trade with, and an opportunity came up on the fixed income side, just as the firm was starting to make inroads into the credit space. 
“I thought about it for all of five seconds,” he says. “It was great to add another string to my bow – at that time Jupiter were really starting to push the fixed income product, so it was exciting to be on that journey. I was basically given a book about yields and convertible Greeks and told to go on holiday for a couple of weeks and learn it, and when I came back I was good to go. It’s a great way to learn. There’s nothing wrong with being dropped in the deep end, as long as you have the right support network.”

“There’s nothing wrong with being dropped in the deep end, as long as you have the right support network.” 

Initially there was just Poole and one other guy in the fixed income division – so the learning curve was steep. “I did take it upon myself to adopt more of a leadership role,” he admits. “Just because I could see that the industry was changing. Fixed income is always undergoing change. But at the time we were still doing things very manually, very slowly. That was fine, but we were only trading a small number of bonds.” 

Bull run 

The uptick really came with the arrival of Ariel Bezalel in 1998, who became a fixed income fund manager in 2000 and who kickstarted Jupiter’s credit success. Heading up the global flexible bond strategy, he manages the Jupiter Strategic Bond Fund – which has returned 110.67% since its launch in 2008 – alongside the Dynamic Bond Fund, with AUM totalling £10 billion. 

“The fund grew very quickly, the strategy was very successful, and before you knew it, we’d reached a few billion and we needed to onboard the likes of Tradeweb, Market Axess, Liquidnet, and look at different ways of executing, of accessing the market in a more efficient manner,” explains Poole. “This is a crucial point that I’ll come back to again and again. Giving the traders the tools to make the right decisions.” 

From 2011/12 onwards, electronification of fixed income started to become more prevalent, as did the use of data to access new parts of the market. As time went on, 2014/15 saw the advent of open trading. All-to-all became the hot topic, and Poole has always been a big advocate of accessing new counterparties. “Jupiter doesn’t really have the scope to broaden out its remit to 25 local LatAm brokers,” he admits. “So it was handy to have access to different pools of liquidity by utilising these platforms. In doing so, we then had capacity to hire additional traders.” 

Then in 2017, Poole was made manager of the fixed income team – and that’s when things started to get interesting.  

Leading by example 

“I felt empowered to bring more change in,” he explains.  

“I think I’m more of a carrot than a stick person. I want my team members to come on the journey with me. I don’t want to tell them how to do things. Buy-side traders don’t like being told what to do. They do like the idea of trying something that works, and then doing it again. My job is to encourage them to try something new. If it works, let’s go with it. If it doesn’t, let’s figure out why.” 

Poole is a fan of the film Inception, and he likes the idea of planting the seeds, the ideas, in people’s heads, and then watching them grow. “That slow dawning that perhaps technology can help you, that perhaps automation isn’t turkeys voting for Christmas,” he illustrates.  

“Buy-side traders don’t like being told what to do. They do like the idea of trying something that works, and then doing it again.”

“I believe in leadership that empowers members of staff to do new things, who are willing to learn. What happens if you make a mistake?  We have a very open and collaborative process around that. If there’s an error, or something we call a ‘near miss’, it gets logged in the system and we look at why it happened and how we can fix it. It’s very much a process, and it’s something that I very much encourage within the team. If anyone sees a gap in the process, I want to move away from the ‘oh, it’s always been done like that’ mindset towards ‘why is it done like that, and how can we do it better?’ That is what I see as my remit – to ensure that processes are as efficient and as streamlined as they can be.  

“I don’t look at things on a trade-by-trade basis, or ever want to say to a trader: you did a bad job. I want to look at trend analysis and understand why they’re making that decision over time, to trade that stock or that bond. Because if it’s sub-optimal, then we need to look at the decision-making process, and then determine whether they’ve got the right tools to access the market. Have they got the equipment to make that decision, or are they doing it just because it worked once, so they try it again.” 

Wag the tail, not the dog 

But there are shades of grey – and for Poole, automation is a monochrome rainbow.  

“Automation,” he muses. “There is undoubtedly a place for automation in fixed income. But automation is very dependent on how you execute your firm’s book of business. Jupiter is entirely active. Every fund manager lives or dies by their decisions, and by their alpha-generating capability. I see the trading desk as being part of alpha retention. If automation allows us to make our workflow more efficient, which means we can focus more on those alpha generative trades where we can actively add value, then I’m all for it.  

“What I’m not in agreement with, is using automation for the sake of it. I’m not in agreement with technology changing your process. I think you should use technology to make incremental gains and incremental improvements upon your existing process.  

“Not all trades are right for automation. I’ve never been a fan of the bifurcation of high touch and low touch. Every order should be treated on its own merits, and we don’t do any no-touch trading at all. The important factor is to have all the tools to achieve the best outcome on an individual trade basis.” 

But not all asset classes are equal, and what works for equities might not work for fixed income. “In the credit space, it’s slightly different,” explains Poole. “We don’t run any passive books, or any trackers. We don’t have a price-agnostic part of the business, and we don’t have to buy and sell things. We have no house view at Jupiter, that’s important – there’s no CIO telling the investment managers what to do. They make the decisions, and our job is to achieve their investment goal as efficiently and as cheaply as possible. If automation assists in that journey, then great. But if it doesn’t, then it shouldn’t be lauded for its own sake.”  

Climbing the Poole 

From managing the fixed income team, which is currently up to three, in November 2022 Poole was promoted to the overall head of trading for Jupiter – and for him, it’s been a natural progression.  

“I’ve always steered away from pure specialisation,” he says. “I think it’s important to have an understanding of all markets. Heading up the fixed income team was my first time as a people manager, and I think it’s important to recognise the value that each person adds. Each of my traders has an area they lean towards, but I encourage them to maintain the ability to work cross-market, and I think we’ve built up a pretty seamless desk in that regard. 

“In addition, I think that in some firms, the trading desk can be viewed as an operational cost centre. And we offer a lot more than that. We offer the ability to be part of the investment process – I’m not suggesting we’re coming up with ideas, but I want to empower my traders to be able to go to their investment managers and say – this might not be the right thing to buy right now. The liquidity profile, the positioning in the Street… We have a huge amount of information, we’re at the coalface getting our hands dirty every day. We should be able to turn round to them and say, with a high degree of confidence, that we have information that can assist their investment decisions.” 

When Poole was offered the head of trading role, however, he had to think about it rather more carefully. “It was a very exciting opportunity,” he agrees. “It was the chance to take on equity and FX as well as fixed income. It’s a shame that the opportunity came about because of headcount reduction, but I think it’s a chance for some areas of the trading desk to take a step back and reassess their use of technology and of data. 

“I’d like to get those parts of the desk to shout louder about how good they are. The average tenure of a trader at Jupiter is about 15-20 years. They are very experienced, they know the market very well. It goes back to etiquette; I think we are well-liked by the sell-side and the way we go about doing business – I hope – encourages people to want to do business with us.”  

Retaining relationships 

Coming full circle, Poole still believes – as he did at the start of his career (and the start of this article) that relationships are crucial.  

“Despite the onset of electronification, trading systems, data-driven decision-making, I’m still a firm believer that it’s a people-led business. Given the nature of our business, which can be very OTC and very esoteric in terms of what we’re looking at, you do require a degree of trust, and understanding between yourselves and your partners. They’re helping you to achieve your investment goal for your client, and that’s what we try to build upon.  

“In every engagement that we have with a sell-side partner, it’s a case of us really trying to ensure that it suits both parties. We have a number of electronic routes into the market, and yes those are important, but retaining and developing these relationships is almost more important than it was four or five years ago.  

“Despite the onset of electronification, trading systems, data-driven decision-making, I’m still a firm believer that it’s a people-led business.”

The Covid curse 

“I think Covid has led to a lot of people losing that element, and not realising quickly enough the value in facetime, the value in developing relationships and in-person. I think people got a bit lazy during Covid – be it meeting people, be it trading – I think people hid behind the electronification of fixed income. We certainly saw a spike in the volumes done electronically, and that then led to a difficulty in trading blocks. We’re now coming out of Covid, and people are starting to have those in-person conversations about how we can get balance sheet and risk provision from our Tier 1 counterparties.  

“The primary markets have really dried up this year, and a lot of people use the primary markets as a liquidity tool. So if you want to get a block done, and access some risk, then you need to have trust and you need to have that relationship. That will have been eroded over time if all you’ve been doing is putting them in competition with each other. If you’re going out every time with $2-5 million and putting everyone up against each other for every trade, there is an element of winner’s curse there. If you win, everyone else knows you’ve won.  

“They might not know who it is, but they’ll know someone has taken on $5 million-worth of risk. They can then position themselves accordingly, and you are off-side very quickly. The banks don’t like that, they would like more bilateral trading, and a lot of that comes with trust. The banks don’t have a lot of balance sheet to provide necessarily to every client, they have to pick and choose. It’s important, as a non-trillion dollar asset manager, that we seek to strengthen those relationships.” 

Ringing the bells 

So where next for Jupiter, with Poole at the helm?  

“There are some immediate changes I think can be implemented,” he reveals. “We currently have a cash management element to our trading desk – I would like that to become more dynamic, and more value-accretive: more cash trading as opposed to oversight of cash positions and collateral. 

“I’d also like to use technology more strategically. At the moment we use BlackRock Aladdin as our OMS, so we’re going to be partnering up with them a lot more to try and standardise views across the investment floor when it comes to how people look at cash positions especially. Data is only ever as good as understanding what you’re looking at – if everyone’s looking at a different view then when something goes wrong, you spend the first hour trying to work out what you’re looking at.  

“A reluctance to change can be an issue, and we on the buy-side often get tarred with the same brush. It can be difficult to move the needle.”

“A reluctance to change can be an issue, and we on the buy-side often get tarred with the same brush. It can be difficult to move the needle, although as an industry, I do think that (especially on the buy-side), we are more collaborative than ever. But within the four walls that constitute Jupiter Asset Management, my views are very clear. We should be looking at how we use data, we should be looking at how we use the platforms at our disposal, and how we can better utilise the technology that we pay for. We should be more vocal about the demands we have of that technology.  

“If we can fix the current internal fragmentation around disparate datasets and technology usage, I think we’ll be in a far stronger position to achieve the goals that I have in mind: which are to help the trading desk utilise their experience and skillset in order to add to the investment process, as opposed to feeling like they are fire-fighting. 

“By this time next year, I’d like every trader to feel comfortable using a dataset in order to tell a story about what they’ve traded and why. We’re quite a quiet trading desk, which is fine at times, but I’d like us to be more proactive. I want us to be able to tell our investment managers what we’ve done, why we’ve done it, and use the data to illustrate that. Then we’ll be able to demonstrate our value, and that’s never been more important for the buy-side. It’s on us, to show that value. 

“And that will happen, within the next year. That’s my role, and I’m looking forward to the execution.”  

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BMLL, which provides historical Level 3 data and analytics to the capital markets, has secured $26 million in Series B investment from Nasdaq Ventures, FactSet, IQ Capital’s Growth Fund and ACF Investors, among others.

The firm plans to use the funding to support the acquisition of new datasets globally, as well as to build on its North American presence with the launch of a new office in New York. 

“The race for speed is over and the race for data and analytics is on,” CEO Paul Humphrey told The TRADE. “When we’re speaking to our customers in the US and UK, it is clear that there is an increasing demand from trading firms for analytics that help them understand how markets truly behave. At the same time there is a real lack of quant resources to carry out the data analytics necessary to make better trading decisions.”  

The orderbook data and analytics provided by BMLL are used by clients including banks, brokers, asset managers, hedge funds and global exchanges to derive predictive insights, back-test strategies and acquire insights into how their markets behave. The firm recently launched BMLL Vantage, a no-code data visualisation tool for European and US equities and ETFs; and has been scaling up its US presence for some time now.  

Earlier in the year, Tim Baker was hired as a senior advisor in New York to prepare ground, while in November 2020, the firm opened up its Data Lab and Data Feed to US market participants via the Data In Harmony (DIH) network; as well as partnering with Crux Analytics to deliver data and analytics to its US client base. 

“For the US particularly, our historic data now goes back almost seven years. This has led to increasing demand for our offering and is one of the reasons we will be opening an office in New York,” Humphrey revealed to The TRADE.  

“We have seen significant pick up in the US over the past 12 months, for example NYU’s Quant Team uses the BMLL Data Lab to carry out research on the futures market at the university’s Mathematics in Finance Program. BMLL has also extended its product offering to provide Level 3 Futures data, recently co-hosting an industry webinar with Eris Innovations, a product development company that created interest rate swap futures listed by CME Group.” 

BMLL aims to democratise access to granular Level 3 data – something that historically been seen as the preserve of more sophisticated firms, those with significant budgets and data engineering capabilities.  

“We take care of the data science aspect and are able to offer our clients data and analytics capabilities ‘as a service’ to help them derive predictive analytics, backtest trading strategies or generate alpha,” said Humphrey. “Essentially, we help market participants make better trading decisions – at speed, and scale.”  

The firm has had a busy year – growing its revenues over the past 12 months, and taking on board new clients including Kepler Cheuvreux, Aquis Exchange, SIX Group and the UK’s Financial Conduct Authority, as well as expanding into the futures market.  
 

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US commercial banks saw their cumulative trading revenue reach $10.6 billion in the first quarter of this year, a jump of 47.8% ($3.4 billion) compared to the previous quarter, according to the latest data released this week from the Washington-based Office of the Comptroller of the Currency (OCC), although just a 0.1% ($10 million) bounce from the first quarter in 2021.

According to the OCC, the significant quarter-on-quarter jump in Q1 2022 was primarily due to increases in revenue from foreign exchange and credit trading instruments.  

And the picture isn’t necessarily as positive as it looks at first glance. Although revenues were up substantially for the quarter, the OCC pointed out that the overall performance of consolidated bank holding companies (BHCs) provides a more complete picture of trading revenue in the banking system than individual bank performance. BHC trading revenue in Q1 hit $15.1 billion, $1.3 billion (9.3%) more than the previous quarter, but down by $12.1 billion (44.5%) from the previous year.  

The OCC’s quarterly report on bank trading and derivatives activities is based on call report information provided by all insured US commercial banks and savings associations, reports filed by US financial holding companies, and other published data. A total of 1,291 insured US national and state commercial banks and savings associations reported trading and derivatives activities at the end of the first quarter of 2022. 

The report found that credit exposure from derivatives decreased in the first quarter of 2022 compared with the fourth quarter of 2021. Net current credit exposure (NCCE) decreased by $49 billion, or 13.8%, to $307.0 billion. However, derivative notional amounts increased by $22.9 trillion, or 12.9%, to $200.4 trillion. 

Derivative contracts remained concentrated in interest rate products, which totalled $145.9 trillion or 72.8% of total derivative notional amounts. However, central clearing is growing in popularity compared to bilateral, possibly due to the drive towards minimising counterparty risk – centrally cleared derivatives transactions increased by 43.4% over the quarter.  

Notably, just four large banks currently hold 89% of the total banking industry notional amount of derivatives. 

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Kepler Cheuvreux this week confirmed a collaboration with data and analytics provider BMLL to boost its order book analytics and improve algo performance.

The agreement gives Kepler’s quant team access to the BMLL Data Lab and granular Level 3 data in order to carry out advanced order book analytics and improve algo performance. The Data Lab provides over six years of harmonised historical data from 65 venues, combining it with APIs and analytics libraries and hosted on the cloud.  

“Financial institutions across the capital markets are increasingly data driven.  In order to understand how markets behave and make more informed trading decisions that benefit their end clients, they are becoming more sophisticated in how they make use of the most granular data sets. Only the most granular Level 3 order book data provides market participants with the necessary actionable insight needed to outperform the competition,” said BMLL CEO Paul Humphrey and Jean François Perreton, head of algorithmic trading quant at Kepler Cheuvreux, speaking exclusively to The TRADE.   

“Many market participants are evaluating whether to build a data science platform internally or look to partner with a specialist firm like BMLL, with key decisions driven by cloud adoption or on premise deployment. Being cloud native isn’t simply about storing data, but being able to run large scale compute that makes quants up to 8x more efficient than running on existing legacy infrastructure.  

“Quant researchers typically spend 80% of their time engineering data to make it usable for quantitative analysis. BMLL is changing this ratio, allowing quants to spend 80% of their time on data science not on data engineering.”  

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In a speech to the Eurofi High Level Seminar on Friday, European Securities and Markets Authority (ESMA) chair Verena Ross stressed the fundamental importance of data when it comes to maintaining the stability of the financial system. 

Discussing the key challenges facing securities regulators in today’s environment, she also warned that while reporting might feel onerous, it played a crucial role in protecting the markets from shock. 

“In a world that runs on data, good quality data is also the essential ingredient to effective risk analysis,” she told an audience of financial ministers, regulators, and practitioners. 

“Detailed reporting requirements now constitute a key component of financial sector legislation. I know many firms complain about the burden of these reporting requirements, but – let me assure you – this data allows ESMA and national regulators to better understand risks and scrutinise market activity.” 

Ross confirmed plans to continue streamlining data reporting and improve ESMA’s data capabilities, stating that the regulator was “putting every effort” into enhancing data-driven risk analysis within the EU. However, she warned that knowing where the risks are is not enough. The ‘dash for cash’ during March 2020 highlighted shortcomings in parts of the financial system, such as short-term funding markets and money market funds, which ESMA is now looking to review and rectify. 

“We witnessed how this sector could amplify shocks and could pose risks to financial stability in stress situations. The vulnerabilities of certain investment funds, combined with the interconnectedness with other parts of the financial sector, reinforces the need for reform, for example, to improve resilience and liquidity risk management for money market funds and open-ended funds,” said Ross. 

On the back of Financial Stability Board (FSB) policy proposals for money market funds last year, for example, ESMA recently published plans to implement these reforms at EU level. 

Ross also noted the vital role that central counterparties (CCPs) play in cushioning rather than exacerbating shocks in the financial markets. During the stress period in March 2020,, they dealt successfully with record volumes of clearing and settlement activity. However, she hinted that in future we could see their influence potentially curtailed. 

“In view of the systemic importance of CCPs for the EU as a whole, we must continue to think about the risks stemming from our reliance on CCPs outside the Union as well as the appropriateness of the current supervisory framework within,” she concluded. 

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The data, released by Acuiti and COEX, tracked traded USD equivalent notional value of contracts traded in over 2,000 contracts at 75 exchanges. The report  showed notional value fell in 2020 when compared to 2019, despite the surge in trading activity, according to founder of Acuiti, Will Mitting, who told the TRADE, “What was interesting about 2020 was the spread of trading with sharp bursts of huge activity around key events such as the initial spread of the COVID-19 virus in the spring or the US elections in autumn.”

“While volumes broke records in the spring with vast trading volumes, the COEX Partners’ data in the report shows that overall notional value actually fell in 2020 compared with 2019 – a result that few would have thought possible after the volatility in February and March.” 

The report also highlighted a volume surge for several emerging markets contract linked with major global exchanges with several contracts featuring in the top 50 on notional value. Brazil B3 had a number of contracts feature in the top 50 by notional value traded.

“I think the key trends are the growth of emerging markets, increased liquidity in ESG-based contracts and the increasing shift away from Libor-based contracts into new reference rates such as SONIA and SOFR.” Said Mitting.

Another trend the report exposed was the growing popularity of the micro and mini contracts in the US. According to the report CME’s micro e-mini Nasdaq future grew over 450%, jumping 82 places in COEX Partners’ estimated rankings for 2020 to become the 39th largest contract by notional.

When asked about the trends going in 2021, Mitting added, “This report highlights some key trends in terms of liquidity growth in 2020 and these trends are likely to continue into 2021.”

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Virtu Financial 

The new products include an execution management platform for FX, broker-neutral access to dealer liquidity, FX trade analytics and data and post-trade services.  

“These initiatives fully leverage Virtu’s technology, analytics and post-trade service capabilities in supporting our buy-side clients,” said Douglas Cifu, co-founder and CEO, Virtu. “By broadening our range of products and services we are delivering our strategic vision of bringing transparency, and Virtu’s technology and excellence in trading and execution, to our clients and to the FX market globally.” 

Virtu is adding new FX execution capabilities to Triton, its global multi-asset class trading platform, enabling buy-side firms to execute FX trades directly with their liquidity providers by RFS protocol and directed execution such as dealer algos. 

The high-speed trading firm is also making its API trading infrastructure available for broker-neutral FX client trading. While maintaining strict client data segregation, the technology allows clients to leverage Virtu’s low latency infrastructure and breadth of geographical and liquidity provider coverage. 

Meanwhile, for FX trade analytics and data, Virtu’s global and multi-asset class TCA is integrated with the firm’s workflow solutions, providing access to the organisation’s market insights. Enhanced FX analytics capabilities include Virtu FX reference rates with high time-granularity, FX algo analytics with direct dealer data capture and expanded coverage for the FX ACE market impact model.  

Virtu stated it is also expanding its global TradeOps post-trade services to include FX trades matching, confirmations and settlement instruction handling. 

“The new capabilities address the significant client demand for FX workflows offered via a suite of integrated technologies and services,” said Michael Loggia, global head of workflow technology, Virtu. “Clients value the ease and convenience of multi-asset class trading and integrated analytics while leveraging the same range of capabilities they rely on for equities-based executions.”

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Michael Horan, director, head of trading, Pershing

The relentless march of algorithmic trading into execution workflows will continue to add to rising volumes in closing auctions across Europe. This will show more intensity around blue chips stock and ETFs as passive investing takes a further hold on equity trading investment profiles, further compounding the skew of liquidity dispersion towards the close. Intraday trading will see growing use of systematic internaliser liquidity and periodic auctions as the sell-side attempts to squeeze implicit trading costs as low as they can throughout the coming year.

Enrico Bruni, head of Europe and Asia business at Tradeweb

As market participants look to cut costs and operational risk, demand for more efficient trading solutions will increase. Portfolio trading will be a key focus for institutional investors and trading venues. Electronic portfolio trading will drive the migration to fully electronic workflows. We’ve already witnessed this shift after we launched our own portfolio trading solution, which we’ll continue to tweak and enhance in 2020. In a market where ETF basket trading is so vital each day, electronic portfolio trading is an innovation that will shape the future of the fixed income space.

Naz Quadri, global head of enterprise data science at Bloomberg

In 2020, we will continue to see the democratisation of data and proliferation of artificial intelligence (AI) reshaping the financial services industry. The front-office was the first to fund and research AI’s potential to unearth valuable insights and possibly improve portfolio strategy and performance, and next year will be critical as organisations evolve the culture necessary to realise these benefits firm-wide. Commitment from senior management to foster firm-wide collaboration and investment in data-driven technology will be pivotal to establish and spread a more data-centric culture across organisations.

This cultural transformation should be approached like any strategic shift a firm undertakes, by allocating capital and rethinking the personnel and skills necessary to succeed. Data science talent, for example, will be at a premium as financial firms look to harness the power of ubiquitous data lakes for enhanced computing and advanced data analytics across the front, middle and back-office functions.

Tyler Moeller, CEO, Broadway Technology

Ongoing disruption in the capital markets will force banks to take a hard look at their FICC trading operations in 2020. To grow and thrive, they will need to establish a relentless focus on their franchise value, embrace more of the ‘build and buy’ model of trading technology, and deploy a rich application integration platform as the foundation of their technology stack. Banks will recognise they can – and must – outsource more of their trading architecture to trusted partners to accelerate internal innovation, deftly handle aspects like order management and Ecommerce, and enable trading workflow automation between various areas of their FICC operations. As banks search for efficiency, we’ll see a consolidation of technology and business areas and the creation of a centralised FICC trading desk. This evolution will be necessary to drive innovation while reducing costs and maintaining competitive advantage as trading margins and regulatory requirements continue to tighten.

Gareth Coltman, global head of trading automation, MarketAxess

2020 will be the year that data-driven, automated workflow becomes an essential and ubiquitous feature of the buy-side trading desk. The tipping point that has already been reached by the largest and most sophisticated firms will hit the rest of the market – no one will want to be left behind. And the size and complexity of trades being executed through AI-based tools like Auto-X will expand, as traders take advantage of faster, more accurate and more intelligent data to enhance their performance.

Andy Mahoney, head of sales EMEA, FlexTrade

Over the last few years, we’ve seen the beginning of a trading desktop revolution, where an open architecture approach is now finally being embraced, offering traders a seamless workflow experience across applications. At the same time, we’ve seen an explosion in the amount of data a trading system needs to ingest and analyze, with fast, secure integration options now being provided through the likes of OpenFin and Symphony. 2020 will see the dawn of the augmented desktop, where smart data and desktop interoperability meet with a focus on where trader and technology meet. The augmented desktop creates a seamless workflow experience for traders, where data is presented intuitively, with machine learning-driven next actions, consistently across all applications.

Lucas Nuzzi, director of technology, Digital Asset Research

For the past three years, conversations around the institutionalisation of digital assets focused in part on the lack of qualified custodians. That changed in 2019, as major institutions like Fidelity stepped in with custody offerings. In 2020, the issue of market manipulation and clean crypto prices will be the main focus of financial institutions and regulators alike. Over the course of this year, US regulators signaled time and time again that the lack of reliable pricing is the main barrier preventing the approval of exchange-traded products, like a Bitcoin ETF. This will necessitate the vetting of exchange pricing data in a way that identifies, quantifies and excludes manipulated data from price calculations. Clean prices will contribute to more reliable valuations and risk management, and will ultimately make institutions more comfortable with the asset class.

Adam Toms, CEO, OpenFin Europe

As we head into 2020, collaboration remains the focal point in order to accelerate innovation and solve real business challenges across the capital markets industry. Enabling individuals at the grassroots level to drive innovation, coupled with promoting the role of FinTech champions and heads of innovation at larger institutions, as well as creating structures and standards that support open and collaborative ways of working, will bring about a sustainable culture of innovation across finance services. In the current political climate, collaboration to drive innovation and economic growth as well as maintain London’s position as a global fintech hub, can only be a good thing.

Anders Kirkeby, head of open innovation, SimCorp

Alternative data (not data for alternatives!) will see a lot more new entrants, offering early adopters a chance to generate Alpha from more unique datasets. But the current number of vendors in this space is far too many – in excess of 100 at last count – making it difficult for the buy-side. To truly thrive, I suspect there will either be consolidation in the market or the attention will shift to alternative data aggregators, who can simplify the choice available. The latter outcome is the most likely and more effective; data aggregators get better at speaking to enterprises faster than any single alternative data vendor with a unique dataset, but few customers to learn from.

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While the implementation and development of artificial intelligence (AI) and machine learning projects have continued apace in the industry, attitudes have noticeable shifted. Buy-side representatives at some of the industry’s biggest conferences ditched the usual hyperbole in favour of more nuanced opinions about the transformative potential of AI, extolling the virtues of patience and long-term planning or just straightforwardly dismissing the misconceptions of what AI is actually capable of. Despite the dangers and pitfalls that technology hype present, the buy-side is powering on with AI adoption and it looks certain to be a central facet to asset management strategies for the foreseeable future. The sell-side, for its part, is also heavily investing in AI for the future, evidenced through financing deals such as that led by Goldman Sachs in start-up H2O.ai.

One of the most interesting technology stories of the year also featured an industry-first, as BNP Paribas took a leaf out of Silicon Valley’s book with a Siri-style digital trading assistant, which launched alongside its real-time market analytics and interactive algorithms as part of major upgrade to the bank’s Cortex FX trading platform.

The TRADE’s annual Execution Management Survey found that EMS providers will have many reasons to be pleased, as scores continue to rise as the industry moves further away from the compliance-focused days of two years ago when MiFID II came into play. However, there are signs that some providers may be resting on their laurels, falling behind the high standards their peers have set in this year’s survey.

The fire around cryptocurrencies and digital assets may have not burned itself out entirely this year, but it is certainly dimmer than what we saw in 2018. In January, the European Markets and Securities Authority (ESMA) stated that certain crypto platforms should be subject to MiFID II rules on trading, while the chair of the European watchdog said the following month that regulators should show “objectivity and open mindedness” when it comes to developing frameworks for the supervision of crypto-assets and distributed ledger technologies. The lack of clearly defined regulation for crypto-assets hasn’t put major industry players off developing their own offerings, with Deutsche Börse outlining its plans for a regulatory compliant, full crypto ecosystem in March, while one of the buy-side firms to invest in the space with conviction, Fidelity Investments, announced at the end of the year that it would be bringing its own platform and custody services to Europe after first launching in the US last year. The less said about Facebook’s much pilloried entry into the space with its Libra project, the better.

There were markedly fewer big money acquisitions in the last 12 months compared to the previous year, but it was the analytics space that was most notable. In September, SS&C Technologies agreed to acquire risk analytics products and services from IBM’s Algorithmics division, expanding its range of data products, while in October, cloud-based portfolio analytics and data services provider StatPro was acquired by investment data automation specialist Confluence Technologies for just over £160 million. Elsewhere, Liquidnet completed deals for marketplace and aggregator RSRCHXchange in May and natural language processing (NLP) specialist, Prattle, a month later.

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FX Forward Volume aims to provide an aggregated view of the forward market for confirming pricing models for forwards and swaps. CLS said that it is the first data product for the FX forward market, with its existing datasets focused on the FX spot market. The dataset will provide insight on the FX forward market for 33 major currency pairs.

“With access to more than 50% of global FX traded volumes in the market, CLS processes over 500,000 transactions daily worth USD1.55 trillion. We are uniquely placed to provide FX forwards data providing deep tenor granularity with precise forward and broken dates to market participants,” Masami Johnstone, head of information services at CLS, commented.

CLS added that with technology and an increasingly challenging regulatory environment, market participants require more in-depth market analytics. FX Forward Volume will look to help users develop new analytics and streamline FX trading strategies.

“The fragmented nature of the FX market means there is a lack of visibility of the total volume across all venues. This dataset will enable the industry to better understand market dynamics based on aggregated volume data, particularly, to confirm pricing models, develop analytics for performance evaluation and further support trading models for the forward market,” Johnstone continued.

Johnstone joined CLS in September from exchange operator Euronext where she formerly led its buy-side sales efforts. She now oversees the development of CLS’s data and analytics business based on FX executed data.

More recently, CLS hired Citigroup’s global head of operational risk management for its institutional clients group as chief risk officer. Deborah Hrvatin took on the role overseeing CLS’s risk management framework and building out enhanced risk identification processes.

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