IMN: Investment in data architecture key to drive trading and operational performance
01 February 2023 US
Image: Siarhei/stock.adobe.com
Data is foundational to trading, firms cannot trade without access to information, according to Mike Norwood, head of trading solutions at EquiLend.
At IMN’s 28th Annual Beneficial Owners’ International Securities Finance & Collateral Management Conference, panellists discussed the importance of data and how it can be used to boost a firm’s performance.
During a panel entitled ‘Market Gamechangers: Exploring Disruptive Technology Platforms & Alternative Trading Models’, Norwood highlighted that firms need to be able to view their inventory, compliance requirements, evaluate where the market is trading, and have access to benchmarking and performance data.
“Firms need to invest in sourcing that data for themselves and building the right platform, or they have to be partnered with technology firms who will allow them access to that information — it is critical, it will drive a firm’s performance and ability to comply with the evolving regulatory regimes,” Norwood advised.
In agreement, vice president and head of securities finance product at Fidelity Capital Markets Yuri Brightly highlighted the value that data — which he refers to as “a piece of technology” — brings to automated trading.
He said: “Over the last six to 10 plus years, there has been a tremendous growth in automated trading — that has been helped by data. When intraday data sets became available, better data sets became available, that made the ability to create different pricing models and to really scale things out.
“Trading is leading to more data and data is leading to the ability to do more trading, and it is continuing to grow.”
However, Norwood recognised that some firms are hesitant to invest in data because “it is not sexy”.
He continued: “If you do not have access to your data, have solid data structures; solid data architecture, it is then very hard to present that information in a way that allows you to integrate and take advantage of the latest tools in the industry.”
CEO of Provable Markets Matt Cohen believes that there are two buckets when it comes to data. Firstly, “there is public data that market participants should all have access to equally, which can also be referred to as compulsory data or regulatory required reporting”. Secondly, there is proprietary data, which is the customers’ data.
“By providing tools to aggregate and analyse this data in a macro sense and allowing beneficial owners, or whoever's using our platform to control their own proprietary data, mixed with the publicly available data, is what we believe technology can and should be a supporting element to driving the discovery of that edge,” Cohen explained.
In particular, Cohen said that advancements in cryptography unrelated to blockchain or DLT is just surfacing in a computationally viable capacity, which allows proprietary data to be transportable in a secure way — allowing beneficial owners to protect what is theirs.
He added: “Combining infrastructure players' respective technology stacks and leveraging better connectivity between all of us will allow those decisions to be made more seamlessly. That must start with arguably the least sexy, but most important parts of any technology offering, and that is connectivity among providers and participants.”
At IMN’s 28th Annual Beneficial Owners’ International Securities Finance & Collateral Management Conference, panellists discussed the importance of data and how it can be used to boost a firm’s performance.
During a panel entitled ‘Market Gamechangers: Exploring Disruptive Technology Platforms & Alternative Trading Models’, Norwood highlighted that firms need to be able to view their inventory, compliance requirements, evaluate where the market is trading, and have access to benchmarking and performance data.
“Firms need to invest in sourcing that data for themselves and building the right platform, or they have to be partnered with technology firms who will allow them access to that information — it is critical, it will drive a firm’s performance and ability to comply with the evolving regulatory regimes,” Norwood advised.
In agreement, vice president and head of securities finance product at Fidelity Capital Markets Yuri Brightly highlighted the value that data — which he refers to as “a piece of technology” — brings to automated trading.
He said: “Over the last six to 10 plus years, there has been a tremendous growth in automated trading — that has been helped by data. When intraday data sets became available, better data sets became available, that made the ability to create different pricing models and to really scale things out.
“Trading is leading to more data and data is leading to the ability to do more trading, and it is continuing to grow.”
However, Norwood recognised that some firms are hesitant to invest in data because “it is not sexy”.
He continued: “If you do not have access to your data, have solid data structures; solid data architecture, it is then very hard to present that information in a way that allows you to integrate and take advantage of the latest tools in the industry.”
CEO of Provable Markets Matt Cohen believes that there are two buckets when it comes to data. Firstly, “there is public data that market participants should all have access to equally, which can also be referred to as compulsory data or regulatory required reporting”. Secondly, there is proprietary data, which is the customers’ data.
“By providing tools to aggregate and analyse this data in a macro sense and allowing beneficial owners, or whoever's using our platform to control their own proprietary data, mixed with the publicly available data, is what we believe technology can and should be a supporting element to driving the discovery of that edge,” Cohen explained.
In particular, Cohen said that advancements in cryptography unrelated to blockchain or DLT is just surfacing in a computationally viable capacity, which allows proprietary data to be transportable in a secure way — allowing beneficial owners to protect what is theirs.
He added: “Combining infrastructure players' respective technology stacks and leveraging better connectivity between all of us will allow those decisions to be made more seamlessly. That must start with arguably the least sexy, but most important parts of any technology offering, and that is connectivity among providers and participants.”
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