Last week’s Paris conference highlighted how data analytics and security have moved up the agenda post MiFID II.
This year's TradeTech event in Paris was the first major gathering of EU equity trading professionals since MiFID II became legislation in January. Judging by the conversations at the Corvil booth and during the panel discussion in which I participated, becoming compliant with the new directive has made the industry much more aware of the power of data.
While addressing MiFID II has been a big challenge for the European markets, the upside is that it has forced trading entities to consider the accurate acquisition of data. And of course, once they have done this, they can start to do clever things with it. AI and machine learning were hot topics at the conference. Tellingly, it was the first time that Google had taken a stand, presumably because it sees opportunities in the market for its own expertise around algorithms and analytics.
During the panel we debated the growing importance of analyzing unstructured as well as structured data. For instance, when considering market abuse it is important to capture all information related to a trade. Creating accurate records for compliance is not easy, because it involves contextualizing electronic trades, voice and many other messaging channels.
However, one common theme here is that all the information passes across the network, and so with a network-based capture system such as Corvil, you are able to obtain an accurately captured and timestamped sequence of events, that would otherwise be difficult to reconcile across multiple disparate platforms.
Because our analytics platform is focused on the real-time packet data that travels across networks, we help to optimize and troubleshoot the performance of trading systems, telephony, and other IT systems that support the business.
There were also signs at TradeTech that long-standing concerns around cyber security are now being taken more seriously. So far, trading has avoided the major breaches that have disrupted other sectors, but there's a widespread feeling that it's only a matter of time before cyber criminals hit payday.
Fallout from the US presidential election has highlighted how fake news was used to influence opinion - what's to stop something similar happening in financial markets? Algorithms that are influenced by news feeds and social media content could potentially be manipulated by unscrupulous players for trading advantage - perhaps they already are?
Now that MIFID is out of the way, I think there's a much greater chance that firms will look to tighten their cyber security. It's no coincidence that to help combat this kind of market abuse, SEC (the Securities and Exchange Commission) has introduced a new cyber unit in the States, plus the FCA have recently announced a new focus towards security.
We don't claim to have all the answers at Corvil, but we have a strong security portfolio. Some visitors to TradeTech may also have seen a demo of a new solution we're working. Watch this space for a big announcement soon. Meanwhile, find out how our network-based approach can help fill gaps in your current defenses.