There is perhaps nothing more central to trading than data. The numbers flashing across your computer screen may represent tangible products but in the end it is all reduced to a data stream. Getting the maximum benefit out of that data and the technology needed to do so were at the heart of the FIA Asia-V seminar: “Are Data and Technology the New Drivers for the Business?” (See the panelist list below.)
On the face of it, one might think there’s not all that much to it. “Garbage in, garbage out” as the saying goes. But listening to the panelists speak it became apparent there is much more to it and both the possibilities and complexities can quickly get out of control.
Catherine Clay of Cboe noted the importance of providing tools to help investors better access the market. As numerous disparate data sources continue to proliferate, it is ever more important for the industry to provide investors with tools to help them “optimize their workflow,” which includes everything from pre-trade to post-trade. Primarily this is done via application programming interfaces (APIs) but that greatly simplifies what’s happening. Numerous data streams for different products need to be able to work together. It is important for exchanges and other data providers to make it easier for these APIs to work together seamlessly. It is a complex task, though.
Consider where your data resides. Corporate servers? In the cloud? Those are the two main choices but the decision is nuanced. The Cloud is attractive for many reasons, not least of which is cost. But with the Cloud the company does not have direct control over their own data, not to mention the integrity of that data, when it comes to transmitting it to and from the Cloud. Hackers are very real and very active and many are very adept. When your data represent the crown jewels to your company, it is hard to put their welfare in the hands of others. Daniel Shek of ICE noted that, for now, most of the data in the Cloud is historical data and customers are taking a “wait-and-see” approach to using it for real-time market data.
The data gets more complex still as distributed ledger technologies, blockchain and smart contracts crypto become more common. John Ho of Standard Chartered Bank noted that these tools are still very much alive and provide some real benefits, particularly in post-trade settlement, which is currently labor intensive. But Both Ho and Melody Ma of OSL noted there are regulatory issues with this technology as it blurs the lines between financial companies and big tech companies coming into the space. Ma reminded us that because of cryptocurrency’s anonymous nature there is a criminal element present and, so far, there is no global approach to regulation of it. This leads to a form of regulatory arbitrage as companies find countries with very lax rules to operate from.
However you receive and organize your data, analyzing it is a whole other task. Drinking from a fire hose is the common metaphor. The use of AI and machine learning is becoming ever more important to analyze all the data in an efficient manner. It is much more complex than it first appears. It is one thing to have an AI learn to watch market prices for a given commodity and decide when to buy and sell. It is another for it to consider myriad other forms of data such as Tweets from world leaders or news headlines or weather reports. One of the most interesting was mentioned by Genping Liu of Vertex Ventures when he told us data can be gathered from satellites, planes and even ground sources to assess conditions in farm fields across the globe and used to help make decisions on crop health and yields.
Each panelist could easily have done an hour seminar (or longer) on their own, there was so much information to impart. Unfortunately that sometimes led to their being thin on details due to time constraints, and there was no time for a Q&A (something we miss from attending Expo in person). I really wanted to ask when Skynet would go online.
- Will Acworth, FIA, SVP, Publications, Data & Research
- Catherine Clay, Cboe Global Markets, SVP, Global Head of Information Solutions
- Christian Hauff, Quantitative Brokers, LLC, Chief Executive Officer & Co-Founder
- John Ho, Standard Chartered Bank, Global Head of Legal, Financial Markets
- Genping Liu, Vertex Ventures, Partner
- Melody Ma, OSL, General Counsel
- Daniel Shek, Intercontinental Exchange Inc., Director, Feeds Business Development