Picking Up The Pieces
The Hong Kong FIX Trading Community Conference was a very well attended and rounded event, with a number of major themes and conversations resulting. Amongst the key themes include the changing burden on the buy-side. This theme generally examined the fact that the onus and burden of regulation continues to shift towards the buy-side, as does the burden for technological understanding and in some cases, development. This has major consequences for the buy-side trader’s required skillset, and this aspect of the trader continues to change, not only to continue to sourcing blocks, but to understand shifting market structure and technology.
The second major theme of the day was the ongoing aspect how the sell-side are having to continually “do more with less”. This is part of a result in changes to how sell-side firms are paid, such as through increases in CSA uptake and increasing demand for high-touch service from low-touch desks. “Blended” desks fit some, but not all of these changing needs, but they also introduce commission/payment complications. There is also a changing emphasis on regional desks on the sell-side: shifting technology teams and traders to cover more markets from centralised locations. This is a subtle shift away from headcount reduction alone, but how firms are having to be smarter with the headcount placement.
The third principle theme of the day was that exchanges and alternatives continue to innovate, and often create many questions (and opportunities) while doing so. Examples of such innovation include the Hong Kong-Shanghai Connect program, which has generated a vast amount of interest across the region; however many questions remain about the precise workings of the program, and much remains to be done for many firms to be confident of being ready in time. On a global level IEX and “the book” continued to generate interest and controversy, and create many questions around the precise nature of market structure that is desirable. While the book itself was not much of a revelation to the industry, it has spurred a much wider conversation which will continue especially in the US and Europe. The common view is that there’s a bit of sensationalism at work, and education is key to retain confidence in the markets.
The final overarching theme was that collaboration between industry participants was a key message in virtually every session. New innovations, regulation, and market microstructure changes are too much for any one participant to handle and optimise. Constructive – and often data-backed – dialogue and consultations are increasingly important for the industry.
The full conference writeup can be found at www.fixglobal.com, and to download the presentations please follow the link:
http://www.fix-events.com/HongKong/agenda.aspx and enter the passcode: GLOBALTRADING
Picking Up The Pieces