Trading desks are undergoing a quiet revolution. Where once traders would have been experts in specific asset classes, modern desks are diversifying. The convergence of increasing regulation, more volatile markets and the increasing prevalence of passive trading has applied cost pressure across many buy-side firms, spurring managers to do more with less.
In financial markets, it is not enough to be a jack-of-all-trades – when competition is intense, the aim is always to be masters of the universe. However, no single trader, regardless of their level of talent, knowledge or the size of their contact book, can achieve this on their own. Cue technology – the great enabler of change in global markets.
From tool to advantage
Over the past decade, electronification across asset classes has meant that increasingly powerful technology sits at the heart of traders’ workflows, governing access to markets, analytics, risk management and everything in between. However, the problem until now has been that traders have had to deal with disparate systems spread not only across asset classes but also functions such as risk and liquidity analysis – encumbering rather than enabling investing teams.
In fast-moving and uncertain markets, modern multi-asset desks cannot afford to be held back by technology. A lack of connectivity, combined with functionality that does not hit the mark, can be a major drag on performance and efficiency for businesses that are trying to reduce cost while driving performance. Fortunately, this long-standing headache for investing teams has a cure with the introduction of single trading systems that give entire investing teams – from traders to risk teams to portfolio managers – access to essential tools to navigate challenging markets.
Technology has adapted to mirror the changing demands of desks and pave the way for traders’ future needs. Accessing a wide range of markets through a single interface is one thing – the bigger challenge that technology is now able to solve is giving the breadth of functionality needed for whole investment teams to work cohesively as a single unit. Combining powerful risk management and trading capabilities, without compromise, is a major step forward for investing teams.
The consolidation of asset classes and investing functionality through a single system is driving major benefits. Risk management teams now have a singular view of exposures in real-time across asset classes, while portfolio managers have a purpose-built view of their strategy without having to cobble together information from multiple systems. Decision-making is greatly improved, not only in terms of strategy but also investment and risk – enhancing how firms function and opening possibilities that were not available even a few years ago.
The significance of this change should not be underestimated. A single system can now give an ambitious emerging hedge fund capabilities only available to much larger firms just a few years ago. All-in-one trading systems are a truly disruptive technology that will have lasting impacts on how desks operate – bolstering the argument for multi-asset desks, creating efficiencies and levelling the playing field for smaller firms looking to take on industry goliaths.
A multi asset future
The old idea that single systems specialising in specific asset classes are the only way to get the depth of market access or access to the right tools and intelligence is no longer true. Firms are now able to trade in equities, fixed income, derivatives or digital assets without sacrificing any functionality.
Firms can be productive out of the gate. Rather than slowly building disparate systems over a number of years, growth and diversification can be instantaneous. These new capabilities will shape the multi-asset revolution by enabling, augmenting and enhancing the investing teams of the future. This change is inevitable – to stay ahead of the curve firms should act now to harness the power of multi-asset trading technology.