As a follow-on to our last published thoughts and ponderings on the Electronification of Markets, we turn our attention to the current landscape and how — if at all — the restrictions imposed upon business and society in general have affected the fintech industry and, more specifically, the Electronification of Markets.
Shifts in Interaction
One of the first things that jumps out to us is how we all interact with each other.
As a commercial business we need to reach customers, and one of those opportunities was always events, seminars, or conferences.
Clearly, those were all completely cancelled, and the alternative has been online “conferences” — which really do not have the same impact. Personal discussions and introductions, often impromptu and spontaneous, occasionally turn into commercial relationships.
However, the most effective approach was always on-site meetings: face-to-face conversations about adding value to your business by embracing new technology and more efficient workflow solutions.
The Paradox of Home Working
Paradoxically, due to home working, it is a time when many are not looking to adopt change. Yet now, more than ever, technology — and more specifically the electronification of the remaining OTC instruments — can benefit a market participant, whether “Maker” or “Taker.”
The increase in operational risk from home working is almost completely mitigated by electronic workflows and Straight Through Processing (STP).
A decent broadband speed is often easier to come by than an adequate mobile signal out in the Shires — certainly the case for me.
Retail vs Institutional Traders
It seems unthinkable that many home-working retail traders are trying to eke out a living with access to huge liquidity pools across many asset classes in real-time via the likes of Saxo, CMC, or IG (other retail brokers are available — not an endorsement).
Meanwhile, some institutional traders have little more than a chat window on a market data terminal or email to negotiate a trade, risk managed on Excel.
And before you say the retail world is vanilla products: you can stream FX Options on retail platforms and have been able to for over a decade!
Volatility and Control
Many people planning to return to the office are now making U-turns as government advice becomes as volatile as the markets themselves — with ever more Gamma in the effect it has on businesses and no real logic to it.
But as they say: you can only control the controllables.
Building Permanent Efficiency
It is becoming clear that working from home is something you will need to do effectively and efficiently, far more permanently than you ever thought — whether you like it or not.
Having the most efficient IT setup is absolutely essential to keep pace.
This discussion is already happening in the most forward-thinking of boardrooms. Regulators such as the European Banking Authority and the FCA are pushing for Operational Resilience and imposing deadlines.
Digitisation is now brought to the fore. If you are to take anything from the next six months, let it be this: the ability to work from home as well, if not better, than you do in the office.
It is not something you should “mask” (sorry about that one).
Final Thoughts
Stay safe.
Control your working environment.
Save time.
