Automation Top Priority for Traders
'Command and control' through automation over trading desks a priority, driven by MiFID II and increased competition.
The recent Avellio poll of financial clients reveals eighty-two per cent of senior traders at tier one investment banks and major hedge funds perceive automation as a critical priority, with 52 per cent citing securing alternative forms of liquidity as their primary focus. We also found that 4% of respondents have automated over 70 per cent of their current trading flow, while a sample of 61 per cent has automated 20 to 45 per cent of foreign exchange trading flows.
Our results also indicate that there is improved pricing and order execution, driving down trading costs whilst resulting in increased controls over trading desks, driven by machine learning and AI.
Given the demands of MiFID II on trading, automation is placing an increasing part in the trading process. In addition, asset owner scrutiny and increased regulatory oversight from the Financial Conduct Authority are stepping up on the random auditing of market traders and asset managers has been the impetus behind the recent move towards change through automation.
Asset managers have now moved universally to tie down their trading workflow processes in order to achieve full compliance under the penalty of heavy fines. This advent towards a change in processes is not confined to Financial Conduct Regulated firms alone, there are visible moves towards a blend of automation with compliance in major markets around the world, which is attributable to the global nature of asset management.
The business of trading has pivoted from a traditional settlements based activity, to a mode of spot intra-day trading risk management, along with constantly changing requirements towards accountability at every step of executing trading. The challenge that this poses for most firms is one of working with outmoded FX execution platforms.
To design and build highly complex FX workflows oriented towards hands-off execution processes demands a complete change of systems and approach. We now see asset management firms visibly critiquing their trading workflows along oith their technology stacks on an annualised basis.
#MiFIDII #Automation #Finance
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