We fire a bunch of questions at Cantor Fitzgerald’s global head of electronic trading to get the lowdown on the algo landscape.
We fire a bunch of questions at Cantor Fitzgerald’s global head of electronic trading to get the lowdown on the algo landscape.Current state of the US equities market?
The current US equity market is full of innovation and change. On the innovation side, exchanges and venues are coming out with new and innovative order types and/or matching methodologies, all with the purpose to make the US equity market more efficient. I welcome these types of competition.
On the change side, SEC came out with a huge set of new rules, some of which gathered a lot of healthy criticism and abundant comments from market participants. We will see how that pans out.
Most exciting opportunity within electronic trading?
For us, the most exciting opportunity this year has been working closely with exchanges and venues to incorporate new order types and new venues into our algo suite to continue improving the algo performance.
Industry standards for algo development – where next?
With the SEC proposed rule set, I anticipate a lot of changes are coming our way. Some of these changes, for example, the Order Competition Rule, will shift algo development standard, if the rule is put in place as is. In addition, industry initiatives such as the Routing Transparency Initiative (RTI), introduced by Enrico Cacciatore, head of market structure & trading analytics at Voya Investment Management, is playing a big role in enabling asset managers to know more about how their orders are handled throughout their lifecycle. At the same time, algo teams will face more requirements around transparency of order flows and routing practices.
Top tech development – where is innovation happening?
I would say the most notable technology advancement this year has to be Generative AI, which represents a remarkable leap forward in the world of artificial intelligence and offers ground-breaking opportunities across industries. Even though we already see firms rushing to offer AI-flavoured additions to their products and this trend is accelerating, they need to figure out where they can apply Generative AI in a broad sense while ensuring safety, accuracy, and compliance with regulations. There is no doubt that Generative AI will be further integrated with our daily lives and continue to transform industries. The question for firms is not whether they should implement LLMs, but how to best implement LLMs with sufficient guardrails to ensure business continuity and prosperity.
In addition, there will be a lot of attention to tokenisation of real-world assets going forward since it expands traded asset class universe, offers increased liquidity and transparency, as well as lowers transaction costs.
Direction for next year?
The fixed income asset class is heating up in offering algorithmic trading solutions. We already have the algo suite for US Treasuries, and are expanding to other regions and more down the liquidity spectrum. We anticipate electronic markets and products to mature and strengthen in this space over the next few years. In my view, this is the asset class that will garner the most upside in the electronic trading space in the next few years.
Top three tips for traders in 2024?
I would say it is important to ask for algo customisation as your requirements change. If you look at the TCA stats, you will notice patterns and trends that will enable you to engage with your algo providers in a granular level. Dig deeper. You will find something really useful to add value to your trading workflow. With growing sophistication of quantitative models and ever increasing electronic solution variety, buy-side firms face a unique challenge: how to choose a product that is straightforward to use and yet easy to customise. We kept these considerations in our focus when we designed our algorithmic trading platform.
©Markets Media Europe 2024
