THETRADETECH DA I LY
advantage by taking liquidity away from the lit
markets, which inherently flies in the face of the
objectives of MiFID II.
How this will play out in the long run is
anyone’s guess, but it’s fair to assume that this
conversation will continue to dominate regula-
tory spheres for some time to come.
Artificial intelligence is the future
This may not be surprising to anyone who has
even a passing familiarly to the financial tech-
nology sphere, but almost every panel at this
year’s conference made at least reference to the
various forms of artificial intelligence (AI) out
there and how it can benefit the industry.
In comparison to other technology buzzwords
such as blockchain that create more noise than
actual substance, AI and its subsets of machine
learning, neural networks and deep learning, are
already making inroads into the industry and the
pace will ramp up considerably in the near future.
Speakers from firms such as JP Morgan, Black-
Rock and Generali Investments all laid out how
they are using AI to enhance their trading and
investment processes, although the unifying
theme is that the technology cannot be relied
on as a silver bullet: The right balance of human
expertise and computing power is the future.
Sean Kennedy, head of investment operations
at Vanguard, highlighted one barrier that can
hinder the adoption of AI systems: transpar-
ency (see page 18). Until systems designed to
aid decision-making can show how data has
been used to arrive at specific outcomes, users
and regulators will continue to mistrust the
technology.
key takeaways
THE OFFICIAL NEWSPAPER OF TRADETECH 2018
Data is king
While AI may be the new darling of the financial
technology world, the reality of getting these
systems right is rooted in the more mundane
world of data. The buy-side in particular has
historically struggled to adapt its approach to
data management and structures to the new
operating landscape, but it seems that may now
be a problem of the past.
Many speakers throughout the conference
were confident enough around their data
practices and the message that building fancy
technology without being prepared to do the
hard work first has finally sunk in.
The presence of Google at this year’s confer-
ence will also go some way to cementing this at-
titude. While the tech giant may have been prior-
itising its cloud services, perhaps as a competitor
to the already well-established AWS, there’s no
doubt that it will see its data capabilities as a key
asset to sell to the industry going forward.
Periodic auctions popularity will continue
Similarly to large-in-scale trading, periodic
auctions have exploded in popularity since the
introduction of MiFID II, particularly in the wake
of the double volume caps on dark pool trading,
belatedly brought into play in March.
Periodic auction book operators such as Cboe
have seen volumes surge in recent weeks on
these types of venues and there is little sign of
that stopping any time soon. The Chicago-based
institution recorded a new one-day record of
€1.08 billion notional value traded on 25 April
(see page 4) and these totals are more than
likely to increase in future.
But not everyone is enthusiastic. The AMF’s
Ophéle specifically called out Cboe during his
keynote address, questioning the limited trans-
parency of periodic auctions and suggesting
that many of these trades could be pre-arranged
(see page 11). As such, it won’t come as a much
of a surprise to see regulators targeting periodic
auctions for review along with large-in-scale
trading in the near future.
Diversity issues should be front and centre
It’s no secret that the capital markets are facing
a diversity problem. A prime example was the
alarming gender pay gap statistics coming out
of the UK asset management mark et earlier
in the year, but this is just one small piece of a
larger problem that asset managers are grap-
pling with.
Many conferences in the industry now hold
specific panels on this very subject and Tra-
deTech is no exception, but it’s time that this
conversation moved to the main stage and a
wider audience. Limited-space think tanks or
pre-conference breakfast sessions do nothing
to address the systemic issue of the diversity
problem and, as with so many other issues,
education is the first step towards positive
action.
As the worlds of institutional finance and
technology become even more tightly en-
twined, the industry has a golden opportunity
to embrace change and put inclusion at the top
of its agenda. Financial institutions are already
facing a touch challenge to recruit and retain top
technology talent, so why not learn from other
sectors where these people want to work?
Issue 2
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