How Market Data and Automation are Transforming Electronic Trading

Whether from a buy-side or sell-side perspective, technology is becoming ever more key to success within electronic trading. Attending the March 2022 FIX EMEA Trading conference was an excellent opportunity to witness firsthand the collaboration between business and technology leaders within the global trading community and gain insight into key developments within the market.

Working with IPC has highlighted the role reliable high-speed connection has within trading, and the importance ultra-low latency plays in gaining an advantage over competitors within the market and in capturing alpha. Gaining insight into the application of software, particularly AI models, that are enabled by this network capability has broadened my appreciation of the sophisticated nature of the technology used by firms.

The FIX EMEA Trading Conference broached a variety of topics, such as the use of Bots, and their relation to liquidity and automation. The use of Bots and AI present an opportunity for trading to a heightened degree, beyond what would otherwise be humanly possible, and allow for more efficient results.

Yet these applications present their own challenges, and as the models will increase in their efficiency through learning, there are still operational risks that need to be accounted for. A trade off must be reached in order to ensure that the benefit of such trading is maximized, and the risks reduced to an acceptable level. Otherwise the benefit of such automation becomes marginal.

Automation as it stands currently is used to augment the results capable for human decision making. Currently this is used to bolster specific elements of the buying cycle, rather than attempting to fully automate the process in its entirety. This can take the form of tasks such as monitoring network latency. Yet through the collaboration between the human interpretation of data and the first-hand experience traders have of the market, along with the quantitative analysis that can be obtained through the use of data, these solutions can allow for the improvement in the quality of analytics that reach the trading desk.

Refining these results can be gained by quantifying the qualitative data available through trader interactions. IPC currently boasts an ecosystem consisting of most of the global financial institutions, and our trading systems facilitate these interactions on a constant basis. By finding a means to capture this data through voice recognition technology, IPC will be able to facilitate this development and help to bridge the gap in automation.