At the Fixed Income Leaders’ Summit in Boston, Stephane Malrait, executive director at the Financial Conduct Authority and Quorum 15, discusses how the rollout of consolidated tape initiatives in Europe and the UK could become a key catalyst for advancing AI-driven trading models. Speaking to Trader TV, Malrait shares his views on the impact of the CT data and broader developments in direct market connectivity on the growth and sophistication of AI applications across fixed income and multi-asset trading.
Drawing on the US TRACE system as an example, Malrait says that greater transparency can improve trading activity, support more efficient buy-side decision-making, and help reduce execution costs.
Interview
Josephine Gallagher – Hello, I’m Jo Gallagher at Trader TV, and we’re here at the Fixed Income Leaders’ Summit in Boston, and I’m joined by Stephane Malrait, a non-executive director at Quorum 15 and the FCA. Stephane, lovely to see you.
Stephane Malrait, Quorum 15 and FCA – Yeah, good to see you, Josephine. Thank you.
Josephine Gallagher – So, I really.. one of the big topics that we used to be talking, we talked about quite a bit over the years is the consolidated tape (CT), and we know that that is now promptly coming out in the UK. You’re the perfect person to talk to about this, so obviously there’s a lot of competition with the US market, where we’re now in Boston, and what will this release of the new CTP in the in the UK and Europe mean for the European market as a competitor?
Stephane Malrait, Quorum 15 and FCA – If we look after what happened in the US, with TRACE, the tape that exists in the US for quite a long time now, creates a lot more transparency around the bond market activity, and it’s used by a lot of the industry players. So we expect that the same will happen in the UK and at some point in Europe, where an increase of transparency is going to have more impact on the trading activity of the buy side and sell side. We also compared to 10 years ago, or 15 years ago, when it started in the US, we are much more reliant on data now than we were in the past. So people need, and are hungry about gathering data at a low cost, and that’s the other objective of the consolidated tape. So being in the US here today is a great way to try to understand how people use it. What do they do with it? How did it evolve over time, and try to see if in Europe or in the UK it’s going to be something similar. And I expect now we have AI as well, so people will gather the data, use their AI model to get more better understanding of what this data is about, and give them more insight to increase their trading activity,
Josephine Gallagher – Really, really interesting, and like, what are you.. we’re hearing lots about, obviously, AI at this conference has been a massive topic. So, what are you hearing in terms of the use of AI as well, for like trading functions, for the use of like consolidated-tape type data? What kind of use cases are you hearing?
Stephane Malrait, Quorum 15 and FCA – So, quite a lot compared to one or two years ago, I think, now people are entering the stage of AI where it’s more than talk, it’s more than experiments. They are really starting to use it on the desk, which is a very good thing. There is a lot of innovation in the world, here on Innovation Day, where people are trying to do that, but to be able to use what they all tell us is to be able to use AI in a good way, they need those data feeds. So this morning we are talking as part of Quorum 15 about direct connectivity, where a dealer can send data directly for trading activity to their asset manager, which is, we are probably more advanced in the US than what we have in Europe at present. But this is data that is needed to be able to develop also AI models behind it, so there is this huge demand for AI application of more data, so the consolidated tape, will be one part of it, but it’s more post-trade, so they want to have also trade activity or pre-trade activity, and this is where direct connectivity will be a big thing in the fixed income markets. In rates, in credit, but also in the cross-asset world. So we heard this morning from some of the banks that you know for the first time you can really start to use this data between equities, FX, fixed income products and commodities as well. To be able to do your, and this is going to reduce the cost dramatically for firms, sell side but also buy side. So AI helps us to make things go cheaper and improve the workflow nobody talked too much about you know the impact of people yet, because we are still trying to gather the different use case and trying to see which one are going to stick and bring revenue to the organization.
