Trading Reimagined is a content series that examines how the transformative power of technology is prompting a reimagining of the markets. Trading Reimagined is sponsored by Exegy.
Technology has driven markets forward in recent years, and newer advances in data, compute, and artificial intelligence are poised to build upon that progress.
That was a high-level takeaway at last week’s International Futures Industry Conference, held in Boca Raton, Florida.
Tech was a pervasive theme throughout the three-day event. Poking fun at the hype around AI, one panelist’s opening line was “AI is the answer. What’s the question?”
The Big Picture panel on March 11 at FIA Boca discussed technology in the context of how it has enabled substantially higher volumes in exchange-traded derivatives.
“It’s the infrastructure and technology that has been built over the past 10 years that has allowed this trading to occur,” said Kevin McPartland, Head of Market Structure & Technology Research at Coalition Greenwich.
McPartland noted technology has advanced across the trade lifecycle, spanning pre-trade, at trade, and post-trade. “As technology has allowed more capacity, new trading strategies have come into the market, which has had a ripple effect across markets,” he said, adding that tech has also enabled risk management practices to keep pace with market evolution.
Bill Borden, Corporate Vice President, Worldwide Financial Services at Microsoft, noted that capital markets firms face the challenge of needing to evolve technologically, but with limited money to do so. “There’s more to do in terms of processing speed, efficiency, size, volumes etc., given the constraints of current tech budgets,” he said.
Borden said firms can address compute, data, and networking from an ecosystem perspective, and from the point of view of how such core tech functions can enable information to be discovered and made interoperable. “How do we build the capabilities to discover information, improve efficiency, and create new products and services?” he said. “Those are the building blocks…This lays the foundation for where AI can be a part of it.”
Data is a “major frontier” at Citi, said Mariam Rafi, Global Head of Futures, Clearing and FXPB at the sell-side giant. The firm is moving ahead with data democratization initiatives, improving tools and the overall ability to make sense of data, and making data more real-time.
“As we move away from end-of-day batch processes to more real time, that gives clients the ability to have more timely insights and risk management,” Rafi said. “And that leads to more sophisticated risk models,” she said, plus an opportunity for Citi to enhance its client behavior analytics.
AI was discussed, in the context of how it can improve data utilization and predictive analytics. “It all comes back to data,” said Tom Pluta, President, Tradeweb Markets. “There’s tons and tons of data out there. AI can take huge amounts of data and distill it down efficiently to allow a human to make a decision very quickly.”
One interesting AI take was offered on the March 12 exchange leaders panel. Stephane Boujnah, CEO and Chairman of the Managing Board at Euronext, opined that AI use cases in capital markets to date have been “boring” to a certain extent, and the big bang from the emerging technology may manifest itself in way(s) that people don’t foresee.
Boujnah said rather than focus on just improving existing processes, perhaps a better question for capital markets technologists to ask is “What can we do with AI that we have never done before?”
