A FIX for Market Challenges

The need to embrace emerging technologies and the pressure to stay on the right side of new regulations were the two big themes at this week’s FIX America event in New York.

A session on Electronic Trading and Buy-Side Automation tapped into how trading strategies are increasingly informed by AI and algo-powered execution solutions. There’s more widespread understanding that data derived from order flows, and the way orders are routed, is becoming critical for creating trading advantages. It was evident in the discussions we had at the Corvil stand that market participants were hungry for the insights that data can reveal.

Smarter automation

All the talk about getting smarter around execution quality, echoes recent research by Greenwich Associates – ‘Customer Retention in the Age of Electronic Trading’ – which highlighted how buy-side clients are analyzing execution data to inform order placement with their broker-dealers.

This is a big change. Service-driven relationships that have long been the basis of the bulge-bracket broker-dealers are breaking down. One consequence is a rise in churn, opening the door for non-bulge-bracket firms to win new business, according to Greenwich, with many of them outperforming their bigger rivals by using more sophisticated execution analytics.

In short, breadth of services alone doesn’t cut it any more. Adopting smarter technology to create demonstrable execution advantages appears to do more for the quality of relationships that the buy-side would have with the sell-side.

For example, applying AI and algorithms to identify patterns, detect anomalies, and spot warning signs in venue and counterparty fills, latency and cancels so that you know what’s happening before your clients do. Similarly, analyzing venues by order type, symbol, etc., more accurately profiles execution and identifies opportunities to optimize routing strategies.

Increasing transparency

Compliance and transparency across the trade lifecycle was a topic covered by one of the afternoon panels, which I got to see via projectors relaying the sessions to where vendors were exhibiting -- just another way FIX events get better every year.

The particular focus of this panel was NMS CAT (Consolidated Audit Trail) and Reg 606. Regulation is always a hot topic with attention now turning to CAT and a need for greater transparency in broker order flows. There were specific conversations about how Reg 606 stipulates that broker-dealers will be required to show exactly how executed orders are routed in quarterly reports.

Corvil is a good fit for CAT which requires high-precision timestamping and NIST synchronization validation, a core component of what we do. Our auto-tagging of order records with synchronization status makes it easy for compliance teams to identify potential issues before the regulators do.

When it comes to the wider issues of venue analysis, the same visibility and smart execution analysis for optimizing client execution can do double duty in providing additional transparency for regulators. It’s why Corvil’s already part of the arsenal of a large number of market participants.

Download the Greenwich Associates report here.

Schedule a demo to learn more about how Corvil helps firms improve trade plant performance and trade execution.

Voyta Karas

Voyta Karas, Sales Engineer
Pico is a leading provider of technology services for the financial markets community. Pico provides a best-in-class portfolio of innovative, transparent, low-latency markets solutions coupled with an agile and expert service delivery model. Instant access to financial markets is provided via PicoNet™, a globally comprehensive network platform instrumented natively with Corvil analytics and telemetry. Clients choose Pico when they want the freedom to move fast and create an operational edge in the fast-paced world of financial markets.