Trader TV spoke to Sunil Patil, senior trader at APG Asset Management, and Oskar Wantola, head of execution technology at Man Group, at Trade Tech FX in Amsterdam, hosted by the Worldwide Business Research (WBR) to discuss their main takeaways and highlights from the event.
Patil, who spoke on the System Interoperability panel at the event, unpacks the complex and individualistic needs of buy-side firms; how there’s a balancing act when it comes to implementing front-office technologies and looks at where the industry is at in being able to leverage pre-trade and live performance analytics and for auto-execution.
Wantola, who was one of the speakers on the Workflow Automation panel, discussed the different forms of automation; the challenges in automating some flow, and how Man Group is leveraging artificial intelligence (AI) for execution workflows.
Interview Transcript
Jo Gallagher This is Trader TV at Trade Tech FX in Amsterdam. I’m Jo Gallagher, and we’re here discussing some of the main takeaways at the event.
Sunil Patil The key for me from this event is basically I get to talk to my peers, understand what they’re doing, what their difficulties are, and if we can learn something from their experiences.
Oskar Wantola It’s good to talk to vendors, to understand what offerings they have. To learn, what’s new on the market, to learn new technologies, new ways of trading. There is a theme that is ongoing for quite a few years now, it’s all about automation, trading faster and artificial intelligence.
Jo Gallagher Okay, brilliant. You were on the System Interoperability panel on the first day, so what did you take away from that panel?
Sunil Patil It really depends on what you want from the system. If you have multiple funds, let’s say hundreds of funds and you have smaller trade sizes, you want to automate it as much as possible. But if you are a big fund, bigger trade sizes, you want more analysis, pre-trade, post-trade analysis. You want algos that are more sophisticated. If you’re on a multi asset trading desk, you have multiple assets to trade on a given day. Then you don’t want, let’s say, five systems to be running at the same time because there’s only so much space on your screen and only so much attention you can give to so many screens. That’s why we needed one system which can handle most of the asset classes that a particular trader is trading, and all the data stays there and all the analysis can be done from the system. So those are the most important ones for us. But it really depends on the asset manager or financial institution. There is no one size fits all kind of solution.
Jo Gallagher You are on the Workflow Automation panel on the first date. So tell me, what were some of the highlights from that?
Oskar Wantola When we think about automation, it’s not only just execution automation, it’s like end-to-end automation, including like post-trade and compliance. Even post-trade experiments could be automated. A way to increase automation, in our view, is correlated with the usage of algorithmic trading within execution. It is much simpler to automate some of the more difficult flow, if you have algorithmic trading solutions in place. The other thing that we’re looking at is artificial intelligence. So we already use AI in execution of workflow in Man Group, not to drive the strategy. AI is just a tool that helps you within your automated process. So we use AI, machine learning tactics to decide our routing where we route to internal algos, broker algos or just directly to the EMS. The router decides what the best rules are for giving an order. for giving market conditions, etc..
Sunil Patil We want to automate, let’s say all the smaller transactions, because there is less value add on smaller transactions, less than $10 million for example. Once that is done, we can focus on the bigger trades because that’s where, lets say, the most value a trader can add.
Jo Gallagher One of the things that I took away from that panel was that automating or interoperability can sometimes deteriorate that level of specialization or what they had said was Best Ex. Do you think there’s kind of this balancing that when it comes to achieving interoperability and having this level of customization?
Sunil Patil It really depends on the asset class. I would say some asset class are very easy to implement or to trade. For example, cash equities is sort of simple. Futures is very easy when it comes to FX. It gets more complex and bonds are really complex. OTC bonds, for example, can be really complex. So for those kind of assets, you really need specialized systems. So there is indeed a balancing act. You cannot have one system for everything. Maybe your EMS can be a generic one and in the background you can have a specialist system running and taking care of all the fixed connections and connections to the banks and different venues. So it really depends on the asset class.
Jo Gallagher Interesting. Another hot topic at this event has been this real time analytics, live performance element of it, looking at it in terms of like pre trade data and having that input output chain of events. So how far is the FX markets in terms of trying to achieve that kind of interoperable cycle?
Sunil Patil I did notice there are some providers looking to provide the real time pre trade analytics. We at APG are also looking to develop something in-house on that. However, it will take a while, so it will be nice that there are some providers which can already do that. Live performance has been there in FX for a while. The only problem is you have to log into different websites or it pops up a new window. So it’s not so well interconnected with existing EMSs. A nice system would be something that can do the pre trade analytics live and do the trading and provide the live performance within the same system and have reports and everything. So that is something I look forward to in coming years.
Jo Gallagher This has been Trader TV at Trade Tech FX in Amsterdam. Thank you for watching.
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