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A simple question came up recently in a conversation – how many new Fixed Income trading venues are there?  I could not think of anywhere th...

Saturday, 4 November 2017

Fixed Income Electronic Trading, MiFID2 and Jarvis Cocker

"Is this the way they say the future's meant to feel?
Or just 20,000 people standing in a field?
And I just don't understand quite what this feeling is..."
--Jarvis Cocker (Pulp, Sorted for E's and Wizz)

MiFID2 is almost here.  The conference circuit globally has seen people debate implementation, clarifications of interpretations of RTSs, level twos and a whole host of acronyms - SIs, APAs, ARMs and so on...

And yet...

Everyone is rather like the character Jarvis Cocker portrays in the song. Wondering if this is the way the future is meant to feel?

This blog has generally covered fact based matters such as OMS, EMS, FIX, FIX Orchestra, Fixed Income Trading Venues, a bit of blockchain and some legacy technology such as Excel.  Try googling "Excel Industrialisation"...

Here we're going for the Crystal Ball to look at some themes.

  • Sell-side juniorisation.  Will continue.
  • Technology replacing Sales Traders.  See Algomi, Neptune, B2Scan and the like.  Will continue.
  • Buy-side investments in trading technology.  Will continue.
  • Buy-side consolidation.  Go big or go home. Either be a niche player or the fixed costs of managing a buy-side will kill your profitability. 
  • Big data in the buy-side.  The next big ticket item reaching the implementation stage rather than the "talking about doing" stage 
  • FIX Orchestra. Will cut costs and increase the cadence of delivery.  Exchanges will be able to get new order types to market, brokers will get new algorithms to market.  Speed of change will increase.
  • Fixed Income Trading Venues.  More to come, more consolidation to follow. But the winner will be the venue that is different.  Why do these venues hire ex-Investment Bankers to sell to the buy-side?
  • Consortium/co-operation/utility business models. Will increase.
  • Technical debt.  Will cause many buy-sides to realise that they should engage in M&A to resolve that issue.
  • Vendor consolidation.  The VCs that have invested in a number of financial technology vendors have realised they didn't invest in "fintech" with the cool-kids.  And they want to move on. Expect a number of buy-side technology vendors to change ownership in the next year.
We'll re-visit these themes over the next few months.




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