Last week’s Paris conference offered a deep dive into MiFID II challenges and how AI is evolving
In an era of unprecedented change for financial markets, TradeTech is one event in the calendar that industry professionals really need to attend. Europe's leading equity trading conference took place in Paris last week, providing invaluable insights into new technology and compliance – two trading preoccupations that are increasingly connected.
Deep dive panels and fireside discussions brought new perspectives to familiar topics, reflecting how fast this industry moves and how marginal tweaks to infrastructure can deliver a significant competitive advantage.
More than a year after MiFID II came in, it’s still dominating conference conversations with the compliance challenges made greater by shifts in market structure. With new trading venues comes different routing behaviors, all of which have to be traceable under the new EU legislative framework. There may be a sense of regulatory fatigue in the industry, but the new rules are inescapable so the best and most cost effective way of achieving compliance remains a top priority.
Many visitors to the Corvil stand at TradeTech were keen to understand how the product works and how our robust timestamping and decoding technologies underpin the accuracy of Corvil data. They learnt how the goldmine of data and analytics that Corvil gleans passively from network traffic, not only helps them to cover off specific regulatory requirements but also to gain deep insights into the performance of their trading systems and client experience, allowing them to make optimizations that benefit the bottom line of their business. Further discussions around Corvil’s streaming API explored how easy it is to share Corvil data and analysis with third party systems at no extra cost and without additional complexity.
Talking of complexity, Brexit is adding a whole other layer of fog when it comes to anticipating market trends. We spoke to a lot of people trying to make contingency plans, exploring the possibilities of trading from locations outside the UK, but with no leave deadline in sight and uncertainty about if it’s going to happen at all, the sense of frustration was palpable.
Another topic that elicits an increasing amount of attention – but in a more positive way – is the role of AI and machine learning across different points in the value chain. Entering the post-hype phase, everyone is looking for the best use cases and it’s real value to trading desks.
There is an understanding that proprietary algorithms and machine-learning models can help build portfolios and execute better trading strategies, but it’s still early days. There was some useful benchmarking with AI in other sectors to try and discern where the biggest benefits may be found.
At Corvil, AI is integral to Intelligence Hub, our next-generation electronic trading intelligence solution. One use case is compliance with MiFID II designated limits for unexecuted order to transaction ratios (OTR), by analysing previous trading results and making predictions on where those ratios are likely to end up. We do it in a timely enough way and with details on which desks or strategies are contributing to enable corrective action to be taken.
Another challenge the conference addressed in a panel that included Corvil CEO Donal Byrne was the best way to manage resourcing constraints while keeping up to date with shifting market structures. We have seen first hand from our customers that building your own monitoring and analytics solutions can end up costing businesses a lot more than they initially expect.
The continuous updates provided in our monthly analytics releases and innovation we bring around AI and machine learning comes from a total commitment to execution analytics that would be unreasonable to expect from internal resources.
By taking care of the core analytics, Corvil frees customers to focus on answering questions. As one customer put it:
The dashboards have helped reduced the time it takes to answer business questions. We sit down with some of the application support teams and say to them, ‘What do you want to see?’ So that's definitely there immediately for them so they don't have to be generating their own stuff.”
Anyone who joined us at the Corvil stand in Paris would have hopefully got a flavour of what we’re about (as well as a taste of Guinness!) and the advantages of partnering with a technology provider who will mitigate investment risks while making sure latency and performance expectations are prioritised.