Technological Developments Supporting Buy-side Trading
Thomas Brown, Manager, Trade Support and Settlement, RBC Global Asset Management and John Wysocki, Head of Cash, Compliance, Fixed Income and Trading Technologies for State Street Global Advisors discuss the must-have technologies for the buy-side and how increased automation leads to increased communication with traders.
FIXGlobal: What are the must-have technologies for buy-side trading? Are they built in-house or supplied by brokers or vendors?
Thomas Brown, RBC Global Asset Management: The most important issues are the ability to find liquidity through electronic trading platforms and to be able to place orders using smart routers to avoid high frequency trading (HFT) platforms. Vendors have an obligation to integrate regulatory or market practices into their environments and these practices can be missed or delayed if they are part of in-house builds. Vendors’ fiduciary responsibility to their client base ensures that their environments are in line with the most recent releases.
John Wysocki, State Street Global Advisors: Our primary goal is to help ensure best execution for our clients by using the most advanced technology in the most efficient way possible. We see significant value in Order Management Systems (OMS) and Execution Management Systems (EMS) to automate compliance and electronic trading across asset classes. We take a best-of breed approach to technology and utilize a combination of internally engineered and customized vendor solutions.
FG: How would you describe your interactions with the trading floor?
JW: IT and Trading have a very close relationship at SSgA. Our primary goal is the same – best execution.
TB: Our team is part of the trading floor so we have ongoing and continual interaction with the traders and the investment team. We support all aspects including new technical builds, which makes it easier to introduce new applications.
FG: Have you seen an increase in interaction in recent years, and if so, around what themes?
TB: The more automated the trading desk, the more we interact with the traders. We’re also finding that the more moving parts there are that act faster – the more important it is to communicate breaks to the desk.
JW: Our relationship has become closer in the last two to three years as the financial markets continue to become more electronic across asset classes. Our business partners recognize that technology is an intrinsic part of the trading process and we communicate on an ongoing basis as our systems evolve and new technologies become available. FG: What piece of technology would you want if money were no object?
TB: We would like to see better matching of settlement platforms around the world. When we can communicate in real time with all jurisdictions, it doesn’t make sense to take 48 hours to move assets or money between parties.
JW: From an IT perspective: An environment that could collect all transactions from production on a given day and replay them in a test environment while precisely simulating and validating all workflows under peak volumes.
From a business perspective: Full integration of all external capabilities into the OMS without performance sacrifice including access to all broker algorithms, bidding ability to multiple sources and execution management.