New research reveals the future of the trading desk

welcome to trader tv your insights into trading for professional investors i'm dan barnes trading desks are evolving at an astonishing pace across asset classes and new research by coalition greenwich and the london stock exchange group is showing us exactly how they're changing and what that means for traders joining me today are quentin lamuzi of lseg and kevin with partland of coalition greenwich we're going to be discussing the research and what that tells us about trading going forwards kevin quentin welcome to the show thanks for having me thanks dan great to be here what are the dynamics that traders are battling against in order to manage trading today so we conducted research coalition grantage and refinitive we went out to almost 250 market participants around the world we split those respondents between equities fixed income and fx so we could understand the different dynamics in each of those markets obviously very different markets in some cases so some of the key findings automation remains key right we've seen a shift over the last five or so years from a big focus purely on electronic trading right that point of trade to more of a full end-to-end workflow right including pre-trade post-trade risk compliance all big themes there another big one cloud computing right 92 of those respondents are on a journey towards greater adoption of cloud computing at some stage in that journey right some fully there some just getting going one other interesting finding and in some ways flies in the face of a lot of this sort of innovation and process forward that we've seen is email is still sort of a widely used tool for communication amongst capital markets professionals to some level we obviously see that changing whether it be for compliance reasons or just for efficiency but we thought that was an interesting little nugget that we found sort of buried there in the data so quentin that's really interesting we've heard from kevin about what the researchers found how would you describe the dynamics that your clients are trying to manage on trading desks today with those innovations we've seen pretty much the same as kevin was discussing throughout the survey if i was to summarize it under you know one umbrella i would call it productivity right so when it comes to cost pressure automation even moving from one tech stack to another productivity is at the heart of and really what we're trying to do here is more with less it's nothing new but it continues on the trend of cost pressure doing more with less people you know so trading desks constantly evolve in my mind from being highly skilled operators morphing into engineers planning automating the workflow the chain allowing to concentrate on high-risk trades and alpha generation so kevin looking at those dynamics in turn in terms of time and cost and limited resources how is technology being employed to help manage those so a big part of the picture here is data is useful for obviously for those trading analytics but also it's a big part of automation right you can't automate a process if the systems that you put in place don't have access to data to decide what they should do next another big theme that has come up over the last few years is integration right there are very few trading desks if any they use a single piece of technology anymore right you're using a variety of systems usually from a variety of providers and they all need to talk with one another right if an order comes in from a client on screen one you need to be able to click it and have it stage the order in screen two and then go down perhaps to an exchange on screen three and that should be seamless cutting and pasting doesn't work anymore there's a number of facets at play here some of it the industry's made a lot of progress in other parts there's just a human component that you know continues to be difficult to automate and make near perfect but we're certainly getting a lot closer there is data there's also the mechanics right your portfolio you order your execution management systems and to have multi-asset class capabilities you need to have very strong connectivity to as many liquidity venues as you can find i would say also derived data and everything that you do with that data to achieve the trading desk goals produce meaningful pre and trade analytics to feed your automation tools and your trading workflow properly during the day so you know we're really well placed at women's stock exchange group to offer this to our clients we have the analytics platform trade performance analytics that gives us real-time analytics and free trade across asset classes we're very strong in the portfolio order and execution management system you would have seen in the press that we agreed to acquire torah and we're expecting to close later this year subject to regulatory approval you know torah will strengthen our multi-asset attract capabilities our automation toolkit and our footprint in asia so we're very excited about this kevin turning to you what effects do these innovations and changes that you've reported on in the research made

to the skills needed on a trading desk today as part of the study we asked that question right what are some of those important skills trading deaths are looking for in the next one it's three years number one answer data science data analysis right understanding how to work with data how to manipulate data if we dig a little bit deeper right we actually see a little bit more of that on the fixed income side than we do in equities in fx sometimes write more complex products understanding bonds and the derivatives that sort of fall in that world it's also a market that is earlier in its evolution of automation right so there's a lot of work equities in fx markets have already sorted there has been a lot of talk over the last few years about traders who code certainly going on interesting though we did ask that question as well about coding as a skill it's on the list but a good ways down the list compared to that data skill so you know thinking about a head trader sitting there writing python code during the day not that common but even those head traders still very much need to understand how python can be used and how to look through data and that seems to be the real trend here that is really interesting quentin can i ask you how do those changing skill sets manifest in terms of your interactions with clients and what your clients are trying to achieve we work a lot more together in order to you know come up with the analytics and the data the clients are trying to get to you know we work with them in explaining the models offering the tools for them to change the models to what they need you know i think we still need the traders to be fast thinkers understand the markets especially when it comes to you know more complex asset classes or less liquid products and have the ability to work under pressure that's not going away yeah you will always have you know tail risks however orders are just too plentiful in any trade of blotter today to just be reacting so understanding deriving analyzing the data to better the processes and workflow is the name of the game in my opinion and that's not going away we've talked a lot then about data and skills needed to manage data how do you see the use of qualitative versus quantitative information changing in terms of the volumes and the way it's being used i think quality comes with deriving the right quantity if you see what i mean so you know you will have qualitative data points that you can use to trade better that will be coming from a quantity of different data sources volume traded in the markets may have been an indication of liquidity in the past i don't think it's a good indication of liquidity that there's a lot of training being done however if you look in the depth if you look into the tick by tick data and if you look closer into that quantity of data it will result in better data points in order to make decisions based on liquidity for example that's been great kevin clinton thank you so much thank you dan thanks for having me i'd like to thank quentin and kevin for their insights today and of course you for watching to catch up on our other shows or to subscribe to our newsletter go to tradertv. net