Asif Alam, Head of Enterprise Capabilities, Market Development, Americas at Thomson Reuters will be participating at The Trading Show West coast taking place this Thursday, March 5 at Parc 55 Wyndham in San Francisco, CA.
In his role at Thomson Reuters, Asif oversees the business development and business management of the firm’s Enterprise product line in Americas. Asif began his career with Thomson Reuters in 2001, and served in several roles including Global Head of Machine Readable News, overseeing the strategy and financial success of news and social media products.
Asif will be participating in the panel on co-location, cloud servers and connectivity- does the cost of staying competitive justify the returns with Conrad Gann, COO, Cerebellum Capital, Pravil Gupta, CTO, Quadeye Trading, Corrie Elston, Solutions Architect, Cloud Platform, Google and Bert Shen, Director, Product Management, Supermicro.
In the run up to the event, Asif participated in a pre-event interview with that provided some insights into the industry as well as previews what to expect during his panel at Trading Show West Coast. Continue reading to find out what Asif had to say about the latency war, trend of “datafication”, new regulatory and reporting requirements and cross asset trading platforms.
Question: Many experts in the high-frequency trading space have declared the latency war a stalemate. In the current hyper-competitive market landscape, how are speed-focused trading firms looking to gain an edge outside of achieving lower latency?
Asif Alam: Many trading firms do feel that the latency ‘race to zero’ is ring-fenced to very specific trading models. Further latency improvements – at best shaving off single microseconds or even nanoseconds – are deemed unlikely to result in increased profitability for majority of the trading strategies, especially when the cost of implementing them is potentially so significant. The majority of firms now believe that operating with competitive latency is adequate, and have adopted alternative trading strategies in order to gain advantage and boost profitability.
The strategies being increasingly adopted are diverse but more complex than those for HFT. As such, they have been characterized as ‘Smarter Trading’ strategies and generally leverage increased computational and data intensive processing. They can incorporate trading across multiple execution venues, in different asset classes, perhaps driven by news or social media alerts, or by reacting to technical indicators based on historic patterns in order to make predictions of near future market movements. Underpinning this Smarter Trading is the continuous processing and analysis of high volume streaming data from numerous sources and presented in disparate formats, in order to generate real-time actionable signals.
Question: In a broad sense, your focus at Thomson Reuters is to turn massive quantities of data into actionable insights. You’ve recently written and spoken about the trend of “datafication” and an increased emphasis on trading smarter, not faster. With data analysis turning into the new battleground for traders, what trends and technologies do you see coming to the fore for solving the challenges of big data in finance?
Asif Alam: Managing vast amounts of disparate data – whether structured or unstructured, public or proprietary – and enabling users to aggregate, normalize, mine, analyze and turn that data into valuable information will be the smart trading skills required in future.
Thomson Reuters has driven some interesting initiatives in the machine-readable news space, providing sentiment analysis and relevance scoring across multiple real-time news sources and Internet content.
Automated analysis of other forms of high volume, value-added data also offers opportunities to those smart enough to identify patterns, signals and correlations from which they can extract value, whether social media, patent filings, political risk indices, ownership data, or a myriad of other potential sources.
Our challenge is not only to deliver the broadest and deepest universe of information, but also to provide the intellectual property and tools to enable firms to integrate their own proprietary data.
Question: New regulatory and reporting requirements have contributed to a growing cost control trend across the trading landscape. How do you see firms balancing the pressure to reduce operational costs with the need to invest in new technology and infrastructure to remain competitive?
Asif Alam: Financial firms around the globe are facing significant cost pressures, certainly as a result of rising investment commitments to comply with new regulations, but also from shrinking business. So as regulators lead the industry toward adopting aggressive risk management practices, these firms are forced to evaluate their data management infrastructures. But as well as implying that costs remain a key focus in this business, the ubiquitous technology mantra of ‘more for less’ also implies that there is so much more that trading firms could be harvesting from technical infrastructure and the increasing ‘datafication’ of everything. Combined, these drivers are resulting in a shift in mindset around the shape of the enterprise and which embraces the current prevailing themes of managed services, big data and high performance computing I see Open Platform as a key differentiator that is critical to technology renovation going across the buy-side and side. In this new world order Thomson Reuters is offering solutions instead of products – integrating customer workflow seamlessly – in a modular approach that is global, flexible and scalable.
Question: You’ve identified cross-asset trading platforms as a trend to look out for. Although they have existed for a while, you’ve noted that there has been a renewed focus in developing and deploying these multi-asset trading platforms. What factors are driving this trend, and what are the potential payoffs for hedge funds, trading firms and other buy-side market participants?
Asif Alam: Many buy-side firms and hedge funds have diverse investment strategies and the evolution of cross-asset trading platforms has indeed been on the agenda for a few years.
However, three factors are driving a renewed focus in this area; firstly the desire for greater agility given market volatility post 2008 and the global search to find investment return in challenging markets; secondly, as markets and asset classes increasingly automate, the aspiration of a single platform becomes more realistic; and thirdly, since the price tag associated with running multiple platforms is too high, firms are looking to reduce their operational costs.
Along with the need to aggregate liquidity and improve processing efficiency of trades through the middle and back office, the desire to break down asset-class silos is compounded by the requirement for a real time, holistic view of risk.