Amid economic uncertainty and pressures affecting our financial ecosystem— including the fallout from bank failures, a fresh look at the foundations upon which our financial system is built and trust issues across untested, nascent fintech players—the ability to move assets under one secure, easy-to-use digital platform has become critically important. Flexibility of the user experience and trust go hand in hand.
In my view, this need is particularly acute among professional traders, who typically perform more complex transactions across several large financial institutions than average retail investors. For example, a professional trader or asset manager might have to manage risk across several large banks and may be allocated only so much risk with each counterparty. They might have to distribute across counterparties to run trading operations, hindering their effectiveness. Friction in this process costs traders time and money, and unnecessarily complicates the transactions they need to complete.
The problem
Traders need to have capital working for them and not tied up in the frictions of dealing with various systems and entities. The capital optimization that is needed to navigate today’s market is largely out of reach for many professional traders. That’s because in many cases, they have to navigate across various platforms, compromising user experience and security. It also creates an administrative burden, because traders may not be equipped to address problems that arise while transacting through multiple platforms. The current trading ecosystem lacks comprehensiveness of the types of assets offered and a lack of nimbleness of movement between them. It also limits traders’ ability to access the full spectrum of asset classes across the market, seamlessly and without friction.
I think it’s time for the industry to step forward with a standard for the trading experience that facilitates easy transactions across asset classes under a single umbrella. This is because a fragmented approach to trading across multiple platforms means every extra second introduces risk, especially amid market volatility. Delays can also be costly in a volatile environment. Minimal disruption while transacting also ensures the ability to make timely actions in response to market movements, thereby ensuring traders don’t have to sacrifice returns on account of antiquated processes or a lack of compatibility among the platforms they’re using.
The solution
A single source of truth delivered through one platform mitigates the need to spread risk across counterparties and eliminates the need to tap multiple providers for risk, ensuring capital and tool optimization. The ability to do everything under one roof allows risk managers and professional traders to optimize capital for all opportunities, allowing for seamless, in-house mobility among various asset classes.
Fundamentally, an “under one roof” paradigm is about access to markets and market data, at traders’ fingertips. Traders require real-time and delayed index, equity and equity options, futures and futures options data, along with timely news feeds, and an integrated solution is the only way to ensure they can make use of this through an easy, efficient user experience across asset classes.
The platform they need, however, needs to be comprehensive enough to be relied upon across several different markets, including stocks, bonds, funds, options and crypto. Many popular platforms might do one or a portion of these transactions well but fall short of a comprehensive offering, in my opinion.
Among must-haves for traders in a platform of choice are deep liquidity access; advanced trading tools; safeguarding of assets under custody; easy deposits and withdrawals; smart order routing; advanced margining and pricing; and a single order book.
Among the tools required, traders need data and charts, including historical market data, analysis and insights on the factors that move markets. For example, traders require enablement to allow for seamless custom trading strategies, including ways to design, test, optimize and monitor them. They also need sophisticated market-scanning capabilities; charts that can be customized; quick and precise trade execution; and advanced order management.
Digital assets under the single trading umbrella
As cryptocurrency and other digital asset investing grows among the professional trading community, there is a need to integrate crypto trading across a broader platform where other asset classes are traded. One area many trading platforms currently on the market haven’t innovated quickly is spot crypto, or the effort to buy and sell cryptocurrencies at real-time prices for immediate settlement.
The ability to manage crypto under a single roof is important for traders who seek a comprehensive toolbox for managing crypto in relation to other assets amid market volatility. Carrying out direct crypto trading within the same platform as other asset classes—allowing traders to buy and sell a range of cryptocurrencies without friction, without the need to move assets to another platform to complete the transaction—saves time and unnecessary fees. Given the increased presence of crypto and digital assets in institutional and professional trader portfolios, this type of offering is becoming increasingly important.
The need for a new normal
The “platformification” of financial services has been underway for several years, particularly for retail banking and investing. We need to bring that simplicity to trading platforms, offering consistency and uniformity of services and access to deep liquidity, smart order routing, advanced trading tools and broad markets—all under a single, trusted platform. The outcomes from this type of innovation across the trading ecosystem will help investors drive better returns and execution, will help markets evolve and ensure traders can manage volatility.
Anthony Rousseau is Head of Brokerage Solutions at TradeStation.
