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The New World of Trading Technology – a View from the Top

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What are the key developments in the financial markets sector today and how are those developments impacting trading technology decisions? Where is innovation occurring and what are the challenges that firms face when deploying new solutions? How are firms tackling such an acute lack of diversity in the workforce that for a recently advertised position, 180 out of 180 CVs were from male applicants?

These are just some of the questions that were covered during the opening session of last week’s TradingTech Summit at London’s Hilton Canary Wharf, a fascinating and wide-ranging ‘fireside chat’, where Alison Hollingshead, COO, Investment Management at Jupiter Asset Management was interviewed by Cathy Gibson, Global Head of Trading at Ninety One, in front of a standing-room only audience of industry professionals.

Technology & industry trends

The theme of the discussion was “The new world of trading technology – a view from the top”, and it started with Hollingshead outlining some key technology trends in the industry, including: consolidation of diverse systems and collaboration between system providers (e.g. Bloomberg/Aladdin); the growing need for capture, usage and analysis of data; the opening up of trading architecture; the ongoing build/buy conundrum; and investing in people and developing diverse talent.

Hollingshead also highlighted various industry developments, such as the move to T+1 in the US; ICE’s decision to cease CDS clearing in Europe; the moves towards equities and fixed income consolidated tapes in Europe; electronification of bond new issues; and the lack of equivalence between the FCA and Europe – all of which will impact technology decisions.

Innovation

Regarding innovation around trading technology and infrastructure, Hollingshead singled out DLT (distributed ledger technology) as a compelling technology that could potentially change the landscape of the entire industry, once it finds suitable problems to solve.

She suggested that SaaS and cloud are now well-established from a product and design perspective, so vendor implementation is likely to be the key differentiator. However, she also pointed out that one of the downsides of the trend towards SaaS and cloud-based offerings is the danger of firms having to run big migration projects only to stand still from a functionality perspective, stating that customisations that have been built into deployed solutions do not always translate well into multi-tenanted offerings.

Gibson shared her own thoughts on customised versus standardised products, saying that standardised products can be harder to onboard because firms might need to break their internal infrastructure to make them fit. But in the long term, upgrades are generally easier to handle with standardised products.

Hollingshead was then asked about the new world of fintechs, and how to know which horse to back from a trading technology perspective. She responded that the key question is whether the technology will enhance the firm’s trading strategy – how does it relate to the firm’s book of business and help generate and retain Alpha, for example? She noted that one of the barriers to entry for fintechs is the natural risk aversion of firms in potentially making the wrong calls.

Talent, skills & diversity

On the subject of diversity, Hollingshead stated that while things have changed a lot in recent years, there is still a long way to go, especially in the financial technology sector where the lack of diversity in the workforce is particularly acute. Gibson confirmed this, stating that on a recent hiring exercise, the company received over 180 CVs, and none of them were female.

While there are lots of initiatives tackling this issue, both Hollingshead and Gibson stressed the need for the industry to try harder and take more chances to find diverse talent, and then to retain that talent through role modelling, sponsorship, mentoring, and creating space for people to grow and develop, such as having the right conditions and benefits for working parents.

Gibson pointed out that while flexibility around working from home is important, it needs to be balanced with visibility, to ensure that diversity is seen, represented and encouraged.

Audience Questions

The session ended with a number of questions from the audience, the first asking for advice on how to handle the wrong hire. Hollingshead suggested that most people can change and want to improve with the right support, management, and mentorship. However, sometimes there are individuals who can’t improve, in which case you have to move them on, ideally to another role within the firm that would be a better fit. But sometimes hard decisions do have to be made.

Also on the theme of talent and recruitment, an audience member asked if it is better to hire from outside or develop in house. Hollingshead and Gibson agreed that both are important. You need a good strategy for developing and retaining talent internally, but any opportunity to pick up interesting & new skill sets should be welcomed.

In conclusion, this was an excellent, insightful discussion, and a great start to the 2023 TradingTech Summit London.

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