By Tim Healy, Global Marketing And Communications Manager, FIX Trading Community
Although the 2016 Nordics Briefing changed its usual venue and time of year, attendance was at a record for the day. The sessions provided thought-provoking comments and analysis with regulation very much at the heart of the discussions. The uncertainty that continues to overshadow the markets was clear and it was interesting to hear about particpants called the unintended consequences of more regulation.
There was undoubtedly a general feeling that the cost base for investment firms would rise as sytems are upgraded to comply with regulatory requirements. As it becomes more expensive to do business, there were also concerns that the trading community might shrink.
However, there was a difference of opinion evident in several of the sessions, with some participants confident that rising regulation will actually present opportunities. As the saying goes “one man’s meat is another man’s poison.”
It was particularly interesting to hear the buy-side’s perspective on increased regulatory measures and the direct impact that they will likely have on their businesses. For instance, best execution under MiFID II is a major undertaking for the buy-side and especially, it was noted, for their fixed income operations. However, the sanguine view was that successful compliance would be an affirmation of the independence of their trading desks and their ability to seek and discover the best execution for their clients.
In the afternoon session, the conference separated into two streams, with one focussing on non-equity issues in general and on blockchain in particular, while the other concentrated in more detail on the effects of new regulatory measures.
The overriding theme for the day was collaboration. Cooperative action is essential and FIX provides that perfect platform to examine guidelines and recommend the best practices for the whole industry to implement.
The Nordics region has a long history of fintech innovation. Recently there has been consolidation in the region, as there has been across the globe and that trend will likely continue. However, it was interesting to hear how important crowd funding has become to the region for fintech and, how it will perhaps supplement the role of banks.
Julia Streets, founder and CEO, Streets Consulting chaired the FIX Nordics panel on “Market Innovations”. She offered some forthright views about the fintech industry, providing a circumspect opinion to counter the hyperbole that often surrounds discussions about its disruptive impact:
“Fintech is not a new phenomenon. If it is, I have to ask what have I been doing with my time? Decades ago, fintech was born in the capital markets: electronic trading, algorithms, ultra-low latency connectivity, FPGA processing, market data handling. I can – and do – go on.
Like it or not, every response to ‘what’s new?’, must give a nod to blockchain, named by many as the technology to deliver huge efficiencies, and participants and commentators alike are keen to see real-use cases emerge. Some claim wholesale CCP reform is inevitable, others counter that in the quest for real-time settlement the extent of industry participant evolution may be prohibitive. We may have some distance to travel to reach post-trade utopia, however blockchain hands do not rest idly and we’ve seen private share market and share registrar services come to market and some predict that custody is ripe for blockchainification.”
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