Every Trader’s Hidden Handicap
Are you even ABLE to maximize your data?
Most trading systems cannot easily integrate new data into their existing process. Difficulty incorporating your data is a hidden handicap to your trade performance. Because often, your data can/could help you improve your trading…if only you could use it.
For most traders, it all starts with the statement, “I’d like to add a column to my blotter….”
Yet, that ability to smoothly incorporate new data into your existing trade process is a growing problem. Sometimes, data comes from outside services. But frequently, it is in-house information…. such as your own customer trading.
Your flexibility here presents an advantage or disadvantage for your trading desk. While most desks don’t give this much thought, “data friction” is a hidden drag on the trading of all asset classes. As the usage of data increases Streetwide, so too does the challenge facing your company.
Systems that require a custom solution for every change lead to the infamous “spaghetti behind the wall.” But this complexity is avoidable.
The Buy-side is being pressured to bring more data into its trading process.
• Routing data should be used for “best execution.
• Pre-trade data should inform strategy selection.
• Reversion data should drive algo customization.
Ideally, unique data is part of each stage of your trading process. The question is whether your trading technology can handle this.
You have informational gold at your fingertips. But your technology’s flexibility is what enables you to build functionality from the information.
You need to optimize your trading, regardless of your current setup. It shouldn’t matter whether your order entry happens through a front-end GUI, a direct FIX connection, or by leveraging a 3rd party OMS. In all cases, a “best-of-breed” solution can allow you to pull in customized data through seamless interfaces, no matter your current trading system.
Technology flexibility, like that, really starts at the beginning of the tech development cycle. It starts with integrating the business analyst, product design, and QA cycle into useable modules. This modular approach prevents data changes from requiring a custom build every time. It also leads to faster support and service of your trading technology.
Every trader has had the misfortune of discovering tech issues. It’s made worse when you’re assigned some young project manager to code a custom implementation. Your more extensive trading process should never be derailed by a tech glitch that causes frustration and wasted time. But you can avoid that with a backward-compatible system. One that can be rolled back immediately to a previous version when needed.
When time is money, speed matters.
ADDING THAT COLUMN
As mentioned, every trader has sought to “add a column” to their blotter at some point. Regardless of the data, you desire to incorporate, an open-architecture allows for a simple addition without the coding nightmare. Open architecture allows the “bolt-ons” without the weeks-long delay.
Post-trade analysis grows more complex every year. But the biggest challenge with TCA isn’t the analysis part.
It’s consolidating data that can be easily normalized for comparison. It’s an apples-to-apples problem. Whether FX, Futures, Equities, or Fixed Income, every trader wants the ability to incorporate the precise data they demand. Again, it is an open architecture that removes the friction in adding such data.
Even on a multi-asset class platform.
Regardless of the data involved, every trading firm needs a robust API capability.
That’s a fancy way of saying that the various software systems can smoothly communicate with one another. As your customer demands grow, the last thing you want is a problem with API configuration because fancy tools become worthless when your systems cannot quickly “speak” to each other.
Whether it’s pre, post, or in-trade, your ability to craft data solutions is crucial.
Open architecture enables you to build upon the tools you already have in place easily. Because the toolsets your traders build will often become a key differentiator from the competition. But only if you have the flexibility to build and customize them.
Finally, firms need a “toolbox” around all of this for creating customized alerts.
Triggers and monitors become crucial when markets are in motion. Alerts that you may not need today can quickly become essential, as the marketplace evolves.
MORE NOT LESS
The industry is moving faster every year. As trading grows more complex, more capability is being demanded from the cross-functional trader in the chair. This is why every trading firm must either build or partner with a company whose data capabilities give them the leverage and scale they need to compete.
The bottom line is that your profitability is literally determined by your ability to capture insights with your data.
Information itself is only potential value. You must leverage that information inside your trading process effectively. How efficiently you can integrate that information often becomes the difference between profit and loss. This needs to become the focus of every trading desk today.
It starts by asking your trading technology provider the right set of questions and ideally a provider that comes with a range of flexible, embedded options for your static, real-time market, and post-trade data needs.
TS Imagine recently participated in SimCorp’s 3-day International User Community Meeting (IUCM) attracting over 500 clients from around the world. For those who were not able to attend the event, we offer this summary of the history, rationale and benefits of the TS Imagine/SimCorp alliance.
EMS integration automates historically manual processes, unlocking hard-to-find liquidity for the buyside community.