Host: Good afternoon, everyone, and a very, very warm welcome. To what I think is a extremely timely conversation this afternoon around the digitization of pre trade client workflows. This afternoon we're going to be touching on challenges today, potential solutions. What does the future hold? We will be having a Q& A session towards the end, and could I ask people to send in their questions via the functionality on the platform, which will make my life easier in marrying up the conversation with the relevant speaker.

Host: We're also going to be having a number

Matthew Cheung: of polls

Host: throughout the session this afternoon. Audience interaction is always really helpful, especially understanding some of the views and opinions of the audience to really help drive our conversation this afternoon. Finally, we will have a quick wash up on the clothes.

Host: So our panel this afternoon, our group of speakers, as you can see, a very, very experienced group of people for you this afternoon, made up of representatives of both the buy the sell side. Exchange venues and the financial technology community, who, as you'll learn during the session, have been incredibly innovative in this space at the moment.

Host: Now before I ask Matthew Chung to give a quick summary of the recent financial markets insights report that was produced on the topic to set the scene for the conversation, it would be really useful if we could just quickly go around the room. And ask the individual speakers to to introduce themselves.

Host: So first off, Andrew if you're there, could you just say hello, introduce yourself very quickly, please?

Andrew Mosson: Yeah, absolutely. Andrew Mawson. I head up strategic partnerships in our FIC e commerce sales team at JPMorgan. Thank you very much for having me.

Host: Thank you, sir. Andy Ross, over to you.

Andy Ross: Good afternoon, everybody.

Andy Ross: My name is Andy Ross. I'm the CEO of Curve Global, which is the LSE's Fixed Income Futures Derivatives Exchange

Host: Clearing at LCH. Thanks very much, Andy. Piaz, you next, please. Afternoon,

Ayaz Haji: everyone. Pleasure to be here. I had updated content at Goldman Sachs. Very passionate about

Host: standardization. Thank you.

Host: We'll definitely be coming on to that one in a little while. Richard Turner could you go next for us, please?

Richard Turner: Yeah. Hi Richard Turner at Insight Investment senior trader in predominantly in FX. I also do some equity trading, but also lead up the innovation on the on the strategic partnership side at, at Insight with regards to technology.

Richard Turner: And just for the record, this is a Movember.

Host: Thanks very much, Richard. Chris, over to you, please. Hi, good afternoon, everyone.

Chris Scott: I'm Chris. I work for TPIK and I lead our products and technology development for equities and derivatives

Host: globally. That's great. Thanks very much, Chris. Craig?

Matthew Cheung: Sure.

Craig Butterworth: Hi, my name is Craig Butsworth.

Craig Butterworth: I'm the global head of sales and account management at Symfony. For anyone who's not aware, Symfony is a secure and compliant collaboration platform which can be used to automate workflows. It's built for needs specific needs of financial services. So it's into an encrypted users on their own data and it's powered by me by by a trusted directory.

Craig Butterworth: Price symphony spent 20 years on the sell side in a mixture of a head of fixed income sales, COO and digital transformation roles. Thanks for having me. Thank

Host: you, Craig. And Matthew, over to you. Could you do the quick intro and obviously give us that summary to set the scene for our conversation

Matthew Cheung: this afternoon, please?

Matthew Cheung: Yeah, thanks, Clive. Thanks to all the panelists as well for joining and everyone in the audience. So I'm Matthew Chung. I'm CEO of iPushPull. So what we're looking at today is, is around where some areas of the capital markets operate in a highly liquid. An electronified and efficient way, you know, particularly in standardized exchange traded contracts, like futures options, equities, many others still involve a great deal of manual unstructured pre trade activity with emails and spreadsheets being the primary workflow tools that are used.

Matthew Cheung: So this creates friction, which is bad for client services, increases costs for both the buy side and the sell side. And that hampers liquidity. It also creates unnecessary operational risk and that arguably feeds into systemic risk and industry level. So given that the industry has seen significant advances in technology in recent years, why do these manual processes such as emails?

Matthew Cheung: Spreadsheets, file sharing, copy, paste and voice continue to exist. So that's the question we're looking to answer today. So

Host: mOving on. So what's wrong with the current state of pre trade negotiation? You know, what are the main problems you're seeing on the trading desk over at Insight,

Richard Turner: Richard? sO at Insight we have a heck of a lot of manual processes. And that's regarding price discovery amongst other things.

Richard Turner: And when you have manual processes and something like price discovery, there is a huge amount there's a huge amount of risk in terms of keystroke risk, in terms of typing things into from one execution system to another. And also on the, on the side of the the bank side, the sell side, when they're receiving that price obviously there is the same risk inherent in their systems as well.

Richard Turner: Now that said we also have to satisfy our best decks and reg requirements from a point of view of trading and so forth. And what can often be the cases that we can spend. two or three minutes trading a particular product and Spending up to 30 minutes in in terms of filling out at the back all of our risk reg requirements Which obviously is is is not a good use of our time and also, you know, they don't really add much value in terms of in terms of what we do From a trading perspective, so it's better for us to spend our time doing that I think predominantly it's probably a lot better for us if we you know spend our time look at doing the analyzing and adding value from a training perspective and allow anything that's you know, a repetitive task to be taken on by the machine or a bot or a robot or whatever it is you want to call it.

Richard Turner: In a sense, we should be programming these bots so that they do these manual processes and also in a far better and more accurate way than a human would do. So I think the big problem within that is that that step change requires resource and from our perspective and insight, we've got a lot of huge amount of focus on resource and lots of different stakeholders and In order to get your priority to the top of the queue, you've almost got to climb Everest to, to, to get that across the across the line.

Richard Turner: So that's another problem that we've got. Another, another key element that we've had to deal with recently and I know we've been speaking at length about this previously, but it's collaboration across desks at Insight. We have five or six trading desks and often those five or six trading desks and half of the similar sort of problem.

Richard Turner: But what we've been finding is that they're very siloed in their approach. You know, they're owned by different business leaders, and this could cause just political problems across the organization. So it's quite important that we collaborate across across teams.

Host: Thanks very much, Richard. You've articulated a few sort of generic pain points there.

Host: You know, Andrew, just from your perspective, what are the real inefficiencies that are holding back the voice business versus electronic these days? I think

Andrew Mosson: I think it's less about holding back the growth of the voice business, more about maybe looking at the relative inefficiencies between the two businesses.

Andrew Mosson: You know, I think we see inefficiency across the entire trade lifecycle in our voice business between both the client and the sell side. You know, that goes on at the price discovery phase, as Rich said through the negotiation, into execution, into booking. Probably less so on the confirmation and settlement side anyway you know, we hear from our clients on a, on a daily basis and I think Rich just alluded to it there as well that, you know, a lot of this is about double entry.

Andrew Mosson: It's about keying from one system to the other about managing multiple channels of interaction. Obviously there's been a huge proliferation of of ways of contacting clients and dealers. You know, you have chat, email, phone you even have some mason I guess what we call hybrid solutions by fintech providers and, and, you know, all of that adds up to, to just inefficiency.

Andrew Mosson: I think, you know, when, when you're in that negotiation stage we do see it from our client's perspective of that collating that collation of competitive pricing. Both from a commercial perspective, but also maintaining their best execution requirements. That's pretty difficult. The manual booking.

Andrew Mosson: And actually, if you wrap the tight controls that we are mandated, and it's prudent to have around these businesses, if you wrap those around it, that leads up to So hugely inefficient processes, both for the clients and for the banks. And I think it really boils down to one thing and that's the standardization.

Andrew Mosson: It's lack of standardization across many components of the voice business today.

Host: Thanks, Andrew. Ayaz, earlier on you brought up that word standardization and said you're you know, it's it's, it's a real passion of yours. So from your perspective, why is there real, no real standardization in pre prey pre trade at the moment?

Matthew Cheung: I

Ayaz Haji: mean to say there's no real is probably a bit harsh. I think, you know, there's been pockets of standardization that have occurred over the years. And you know, fix probably being the best example pre trade, but also, you know, like things like FPML now, you know, I think the reason that these haven't really impacted the the voice kind of workflow pre trade is, is probably a couple of reasons.

Ayaz Haji: Number one is that. The standardization efforts have tended to kind of correlate around electronification of markets in general, right? To electronify a market, you need to have standardization. So, you know, it's kind of a forcing function to that

Host: but fix with equities and why that's so

Ayaz Haji: successful.

Ayaz Haji: Exactly. And you know, the other thing is that it's cultural to a degree, and, you know, you can kind of see there's correlations between you know, business functions, which were maybe a bit more operational in nature, where there's been a lot of focus on, you know, the ROI that, Of doing those functions manually and you know, things like confirmation, for example, and all of that has been electronic, right?

Ayaz Haji: So we're in this kind of strange position where, you know, the pre trade is still kind of very manual, but then after that, a lot of that is an STP. And so so, you know, I think now that. Margins are under pressure in the front office. There's a lot of there is the right amount of focus there. The other angle to this is is how do you standardize right?

Ayaz Haji: You know, it seems daunting. It sounds daunting, but you know, technology has come a long way there, you know, through. Organizations like Finos now, there's, you know, there's tooling to help the industry standardize very quickly. And, you know, we can kind of do those things in weeks and months, whereas previously they would have been, you know, measured in years, which obviously wasn't very appetizing for the industry.

Host: Yeah, I can see definitely it's growing pains sort of largely in some of these in some of these areas, as you alluded there, Ayaz. Chris, if I can come to you you know, given what we've just heard from Ayaz and also from Andrew you know, why do you think spreadsheets are still so prevalent in the industry?

Host: Well, thanks,

Chris Scott: Clive. So I think that the question that answers that is without them, could you imagine how much more inefficient we would be? I think if you look at like the point Richard made around how long it takes, everybody's nodding there, you look at how long it takes with all the kind of processes we as an industry have built up within Excel, within these spreadsheets, we've solved for a great number of problems.

Chris Scott: And now when we're coming to look to address them, Everyone works in a kind of resource constraint way. Typically it's in the development area and the backlogs are in terms of like, which, which problems get solved first, when you come to an area where there is a solution in place, where it's a case of how do we take this task and automate it, the two factors of play you're looking at is return on investment, return on equity, these kinds of metrics, as well as opportunity costs.

Chris Scott: And the latter is kind of the big point for everyone. I know our clients experience it. We experienced it in terms of we have to be very selective about which problems we solve because the development area is the hardest point to get resourced. If you look at actually what makes Excel successful, the kind of skill set required is much lower than, say, Java or HTML5 or any of these kind of new technologies out there.

Chris Scott: It's much easier for someone with kind of business SME type knowledge to sit down, take a problem and solve it in Excel. And the ones that scale really well kind of escape Excel. But that's if you actually add it up that a lot of these problems really actually justify the legs, certainly the cost historically of migrating them off as technology is becoming more prevalent and cheaper.

Chris Scott: I think we're going to see a new era where it's easier to deliver that. And certainly some of the platforms out there we're seeing are moving that way. But it, it lets you standardize where there's no standards in place. It lets you take data and standardize it in whatever makes sense to your internal systems.

Chris Scott: FIX works well for very simple products like equities, effects, where there's, there's kind of a single thing. But when you're trading kind of more packaged, more complex products, understanding what you're trading, understanding the different parameters of that trade is not something that's easily expressed in a kind of machine readable, understandable way.

Chris Scott: It's still something that rests very much with humans and our ability to look at a string of text and understand what it means. And Excel is a great tool and a great solution for that.

Host: Obviously why stuck with the equity markets, not able to cope with the the complications of the more esoteric products.

Host: Thanks very much for that, Chris. So Andy Ross you know, what do you feel the barriers are to addressing these issues and why has progress been so

Andy Ross: slow? I guess I've got two points to make. The first point is there's some really topical news. If you look at Australia, the Australian stock market hasn't been up for two days to do with the

Matthew Cheung: turnover.

Andy Ross: And they're a great bunch of people and a brilliant shop. This is not about criticizing them at all. But resilience in markets is super important. And I, we've come from the LSE. We have resilience ground into us. Changing something, moving from a stable environment, whether that's stable with manual processes, but it is stable, to a new environment that's automated, has inherently huge amounts of risk in it.

Andy Ross: Yeah. And that means in the type of business we're in, which are making big decisions, you get a buy and a sell wrong. That could be because the testing is not right because the process doesn't work. You could be costing not thousands, but millions of pounds. In terms of impact, and so the risk reward dynamic here is difficult, and we have a very regulated environment, and so that hugely regulated environment that with different people are under different elements really drives us to have much higher barriers to change in certain places.

Andy Ross: And so my view is that when you look at something like a clearinghouse like LCH, or you look at something like the London Stock Exchange curve my company on the London Stock Exchange markets. That if you think about that, we have to view those as a nuclear power station. They can't break, they can't fall over.

Host: Yeah, so effectively a lot of that risk can be to the detriment sometimes of innovation and and, and driving, and driving things forward, and digitization as well.

Host: So, some of the things we talked about around standardization, you know, and what are... And what technology and standards are there currently available to enable digitization? So, Craig what new technologies and are currently being adopted to address these issues, please?

Craig Butterworth: Sure. Well, there's certainly no shortage of potential solutions out there, whether they be from established vendors or fresh startups.

Craig Butterworth: I think the problem, though, is that in a lot of cases, although they represent incrementally better tooling. They still represent the same flawed point to point processes. And that's really a suboptimal outcome equally. It's incredible really how many of these the so called next generation solutions ultimately still hang off of email.

Craig Butterworth: And whilst I'm not saying that email is suddenly going to die there's no getting away from the fact that email is inefficient it's unstructured and it's not secure. Now clearly I'm biased but for me the mission is to cohesively bring together a selection of tools leveraging a common, secure, and compliant collaboration platform.

Craig Butterworth: And the network effect here is, is huge. It goes beyond simple chat and video calling. If you think about it as the sell side, the buy side, and also the network players, like exchanges, clearinghouses, other vendors, all come together. That helps drive standardization at an industry level. And as we've touched on already, data standardization is a critical precursor for driving automation.

Craig Butterworth: And I think by doing those things, you can start to really smash apart some of those legacy silos. fundamentally re engineered processes, all with a mindset of delivering an improved client experience, better internal efficiency, and at the same time, a significant reduction in operational risk. And so for me, that's really why the combination of Symfony and iPush Pool represents the perfect match.

Craig Butterworth: We provide that secure, extensible collaboration platform. Plus of course the, the trusted directory of over 500,000 users. But then within the symphony ecosystem, I push, pull, delivers the tooling to, to easily bring together data from multiple sources of multiple types, which can then be used to drive data-driven workflows off the back of it.

Craig Butterworth: So it's really a hugely powerful combination. And obviously as the the symphony community continues to grow, it will become ever more impactful

Host: over time. That's great. Thank you very much indeed, Craig. Ayaz, if I can come back to you, and coming back to standardization, and obviously Andy spoke about the issues of regulation.

Host: If things move too quickly and not tested correctly, then, you know, the risk is absolutely huge. So you know, what trends are emerging at the moment around standardization, and why is it so important for automation and control?

Matthew Cheung: So, you know,

Ayaz Haji: standardization just is a huge enabler and, you know, when you kind of think about it, and I should, I should qualify, you know, when we talk about standardization, we really think about open standards and, you know, open standards that, that anyone can build on top of and leverage.

Ayaz Haji: And You know, that helps in a few different ways to the problem space we have here. So number one, like I noticed on the poll integration was separate to standardization, whereas really the cost of integration is hugely related to what standards are being used in the APIs or however, whatever technical protocol is involved

Host: going on around the room.

Host: As you say,

Matthew Cheung: like, so,

Ayaz Haji: you know, I think if we had. Standards that cost of integration goes down the cost of developing a solution. Whatever that product be that that people feel will help the marketplace. The cost of developing that product goes down because you have standard standards to basically bootstrap off.

Ayaz Haji: But also, you know, you can build things like, you know, Testing harnesses that the whole industry uses. And so, you know, there's a lot of control benefits that can come out of that. It's not just the standard itself that has to be implemented. There's a whole periphery of things then that can sit around that.

Ayaz Haji: And those could be open things or those could be proprietary things. You know, that's, that's the kind of beauty of it. So so I think there's a lot of these there's a lot of these benefits, which aren't really obvious, but the key thing is that if you have standards, it allows people to focus on what is their core value proposition to the market, right?

Ayaz Haji: And that could be as a market participant, or it could be as an intermediary you know, or a a kind of service provider. And so, you know, once people focus on that, then it's just great for the entire market.

Host: Yeah, I think nobody's disagreeing, you've got so many people nodding around the room. Matt, if I could

Matthew Cheung: come to you next, and

Host: you know, what, what can FinTechs like iPushPool be doing to help drive forward that standardization, and, you know, what are the, then, the ultimate benefits for the community, please?

Matthew Cheung: Well, I think like I as has touched on, you know, in terms of driving new standards where everyone wants really is industry collaboration, you know, fix is a is a good example of a well governed, well accepted protocol that's been around for a long time. And then more recently, you know, you've got bodies like creating standards for desktop workflow, but there's also situations where firms.

Matthew Cheung: Just get on and do it, you know, some, something can become adopted as a de facto standard just because people have started using it. I think Fintechs often sit between all of these different types of standards and approaches. For example, our platform can integrate and conform to the likes of FIX and FPML and FINOS.

Matthew Cheung: And that's because we want to adhere to existing standards. We've also got some innovative customers that have particular workflows that their counterparts are already conforming to. So for example, we're working with a buy side and a number of dealers using a syntax that we've brought together. And the idea is then to have additional participants able to contribute to that too.

Matthew Cheung: And then we'll feed that standard back into the industry and it becomes a virtuous circle. And as the standards improve, you know, it enables greater workflow automation. And because of technology, there's also another approach, so that's the ability to interoperate between all the standards, utilizing tools like data mapping chatbots and so on.

Matthew Cheung: So you can have two different counterparts, can actually have two different inputs and outputs and even standards, but they can both still communicate seamlessly because of the interoperability and the data mapping that sits in between it. So something like our platform and a few other FinTechs can provide.

Matthew Cheung: How does this benefit the community? Well, I think Fintechs ultimately provides, I think like Craig said, a collection of tools and services that allows you to create a data led approach and a more efficient, client focused process, and that's without having any of these kind of cumbersome legacy processes hanging around.

Matthew Cheung: And then financial institutions can leverage Fintechs technology to drive efficiency with the least amount of disruption to workflow. So the pre trade kind of world that can be a, an easy way of communicating with multiple people an easy way of managing those negotiations, but fintechs also allow solutions to be fast to market.

Matthew Cheung: So it's easy to build and deploy bespoke solutions that no one else has. And then that can create competitive advantages. as well as encouraging innovation. Probably touching on some of the comments that Andy made. It's that fine line between innovation and risk. And then lastly financial institutions can focus on their value add while fintechs can focus on delivering, you know, the best software for that particular problem.

Matthew Cheung: And then it means a bank or vendor standalone applications or software. They're not, they're not longer forced upon users and instead Fintechs can enable those processes to be embedded into their client's workflow. So it's more seamless for the end clients and it's more seamless and easier for the sell side, the broker and the vendor as well.

Matthew Cheung: Yeah, I think

Host: that's I think that, you know, what you're touching on there. Craig's mentioned it already and you've been, you know, very eloquent around it is the ability of having interoperability between multiple systems. And one of the systems that seems to be very clear clearly at the forefront of this type of pre trade negotiations chat systems.

Host: So we've touched on some of the difficulties that people are seeing at the moment and the Yeah, the difficulties around standardization around pre trade negotiation. We touched on some of the initial, technology that have been utilized So, you know, what do we really think the future of pre trade workflow looks like?

Host: Craig can I come to you and think, you know, it's been a funny old year. And do you think COVID, the increased remote flexible working has accelerated digitization and how organizations have been responding to the demands in the new environment. Is this was what going to drive some of the the future of pre

Matthew Cheung: trade negotiation?

Craig Butterworth: Yeah, I mean, look, if I think back to March when it when it became clear that the COVID situation was pretty scary, it was about to get a lot worse candidly, we were inundated with customers saying to us, help. And the reason for that, the reason for that urgent call for help. Was that for many of our customers there that business continuity plans historically had been designed to deal with a scenario where maybe there was a fire or a power outage in a building, perhaps worst case, a bomb going off in the city or something like that.

Craig Butterworth: All major events, of course, but ones where ultimately. Switching to a disaster recovery site with larger

Host: mitigating all to another centralized

Craig Butterworth: environment. Exactly. Right. Exactly. Right. And then, but when you think about the context that we currently find ourselves in, it's a whole fresh challenge, right?

Craig Butterworth: How do you keep your workforce connected, productive, secure and compliant when they're all locked down for months and there's no clear end in sight? And for me, there were really two key takeaways. The first one you know, without a doubt, there has been more digital transformation in the past eight months than in the last eight years, you know, whether, whether that be down to long held biases against working from home, really being disproved by necessity, or whether it be the fact that lockdown has.

Craig Butterworth: You know, again, being candid, exposed to manual processes, which firms had previously kind of band aided by offshoring to to low cost locations. I think, you know, I could, I could think of so many different examples that I've seen over the last sort of nine months or so. But the punchline is the same.

Craig Butterworth: The pace of change and transformation truly has been incredible. And I think the second takeaway is is really the need to have a coherent omnichannel strategy. It's a trend that was already firmly established, especially outside of financial services, ironically, but which I think COVID has really highlighted.

Craig Butterworth: And at its core, it's about customers being able to frictionlessly switch between multiple different communication channels as it suits them, kind of device interoperability, if you like. And in a case of a heavily regulated industry like financial services, the challenge is enabling that, that desired.

Craig Butterworth: Seamless customer experience while still maintaining the strictest levels of compliance and security. So I think the mission is to be able to take communication, which historically might have been thought of as siloed or non compliant, like WhatsApp or WeChat, for example, but then to funnel it through a more comprehensive platform, which.

Craig Butterworth: addresses those shortcomings, but at the same time meshes them into a broader workflow digitalization strategy. And of course, look, maybe my lens is skewed, but certainly the demand we've seen for our, our connect product, which, which does exactly that. It pulls channels like WhatsApp and WeChat together.

Craig Butterworth: It funnels them through symphony to deliver that objective. It has been absolutely huge to give you some, some context. I mean, 2020, we've seen something like a 300 percent increase in the messages sent across our platform every month. And that really reflects, I think, a fundamental change of mindset, a resetting of muscle memory.

Craig Butterworth: And I think now that people have seen the benefits of that kind of chat based approach, I think it's here to stay.

Host: Yeah, that's very interesting. Andrew, can I come to you? I saw you nodding your head a lot there. You know, has this been same experience in your organization? And what have been any particular challenges you've had in this this whole move to a more decentralized working environment?

Host: I mean, I think a lot of what Craig

Andrew Mosson: said there resonates with me, which is why I was shaking my head or nodding my head violently there. You know, I think I think compared to many industries, we had a head start when, when COVID really hit both through necessity and luxury. Most of our businesses had BCP plans in place that, you know, Craig alluded to.

Andrew Mosson: Yes, they were about moving from one centralized place to another, but that's best than nothing. And I think that, you know, definitely JP Morgan, we were able to adapt a lot of those plans and, and, you know, take them one stage further into having you know, a decentralized workforce where it needed to be you know, I think would any of us a year ago said that every single panelist on this call would be working from home, including an execution trader?

Andrew Mosson: No way. I think, you know there's been You know, an undeniable push through the inertia of decentralizing workforces in, in any financial services organization. I think that has inevitably and will inevitably drive more digitization. I think one thing that, you know, we, we really see from our perspective is trust in the machinery.

Andrew Mosson: You know, there was back in, back in February, March, April, May, there was unprecedented volumes in, in market activity. And for the most part, Everything works. And I think that's a testament to, you know, when you do digitize processes and you do it properly, then, you know, they do stand by there for you.

Andrew Mosson: I think what would be great to see is when the dust settles as as we move from. pushing out our workforces as a necessity and really do the lessons learned and look at, you know, how we can innovate and use the experience of the last nine months, you know, positively and actually, you know take the good things out of it.

Host: Now, I think that you know, obviously what Craig was saying very much resonated with you and has been your experience as well. Chris, can I come to you next? We've talked a lot about digitization, standardization, operability, loads of bots, et cetera. You know, how does technology provide you a competitive edge in your business?

Chris Scott: Sure, so I think it varies slightly for everyone depending on their role in the marketplace and what they're offering to their clients. At TPIcap, our target is to electronify more markets. It's an aggregate of internal kind of silos where we've got various legacy technology stacks, different pricing. We want to aggregate that for our clients, and we want to diversify the kind of range of services, the products, and we're also seeing a kind of new client base emerge for us.

Chris Scott: So, high frequency trading firms in the past decade, we're seeing kind of more demand for, if you look at market access and some of our competitors, the kind of all to all platform. So, so the world is changing, and our user technology within the group has got to change. On a kind of historic basis, we've used and tried to run our own platforms.

Chris Scott: You go back a decade, you'd walk into a trading floor and like the credit side, you've got every single broker with their own platform. The credit trade has got eight different screens in front of him. Six of those are just trading platforms. These days, he's got one or two screens with a kind of aggregation service.

Chris Scott: These, these kind of platforms are pretty closed in nature, and the APIs of them aren't accessible to third parties such as ourselves, so we can't actually innovate. And where we're seeing kind of opportunities now is take platforms like Symfony with OpenFin. They allow us, on the kind of open API basis, to innovate pretty rapidly.

Chris Scott: They allow us to produce kind of robust, resilient products and services and offer those out to our clients. And when you're kind of in the product and service industry, ultimately you're investing in a wide range of product and services, knowing that many of those will fail. So you want to keep your cost down.

Chris Scott: You want to keep time to market down and you want to kind of maximize the winners. And find the losers and figure out which ones those are quickly and move on for them.

Host: That's the whole idea of fail, fail fast, move ahead. Yeah, absolutely,

Chris Scott: fail fast. But just to, on that point, like people kind of associate fail fast with technology that also doesn't work.

Chris Scott: And that's very much not the case. It's just around which products don't get the critical mass, which products don't get adoption. To Andy's point, we have to be very capable of delivering reliable, resilient technology that works for our clients every single time they use it. If we can't do that, then we've not got a service or product that's going to get adopted.

Host: Yeah, and I think you're right. It's the fact it's not necessarily always the technology that fails. It's quite often the technology is very sound. It's the product that's built on that technology. Yeah, and then try and deliver it to the client, whether that actually works as a business model. Moving on from that, thanks

Matthew Cheung: very much, Chris.

Matthew Cheung: What

Host: impact do you see these developments having on the reach of exchanges, venues and clearinghouses, Andy? I am.

Andy Ross: So I think that's a really interesting question. So we, as an exchange, you would expect us to have really standardized processing coming in and you'd expect us to have really efficient processing going downwards onto the LCH.

Andy Ross: And that, if anything, in terms of the market, it's probably the most structured process, most organized. But going back to the, some of the points that Richard made right up at the front of the conversation, there were definitely bits of that process pre trade, which are conversational, but definitely price discovery and efficiencies.

Andy Ross: Yeah. And doesn't just because you have a great matching engine for trading doesn't mean that's the only way. that you have to trade. So for instance there's a product that the LSE has called Turquoise, which allows blocks to match in the middle of the market that gives people block size transactions.

Andy Ross: And why is that? That again, it's just another way of interfacing with the market. Clearly as an exchange, we demand lots of. Process and control around that where I think there's some great things listening to where Matt and and and Craig talk is how else can the business work? How else can people work with Chris's style of organization to come up with a new way of finding liquidity, matching buyers and sellers that occur outside or alongside classic exchanges and to me?

Andy Ross: I feel that that process has always been held back because of either regulatory oversight or the operational risk elements. Yeah. And now maybe it gets freed up and released by that. So perhaps there's a great opportunity for new ways of innovating and doing new business. That is a come, that comes as a result of this.

Andy Ross: Lastly, I would say that not all people ran to new things in the crisis. So where Craig had a brilliant crisis. Congratulations. We didn't have that great a crisis. As a new exchange competing with an incumbent who's in that market. People just said, look, we're not going to trade on the new one.

Andy Ross: We're just, we're not going to look at two screens. We're just going to look at one. So while we've seen a huge uptake in innovation in some senses, for us, it was our growth and an explosion of open interest has occurred when the market and people have got back to some sense of the new normality. To me, I think change, going back to that bid offer in terms of risk reward, Has to occur in a stable environment when you're talking about the the size of downside risks that we were previously talking about when things

Host: go wrong.

Host: Yeah, so it's almost you need the crisis to drive the innovation. But when you get to a relative normality, then people can sit back and go, right, okay, we've got some new ideas here. How can we move those forward? I think that's a, that's a very, very interesting concept. Richard coming to you. I know you started the conversation here.

Host: With some of the issues that you're seeing on the trading desk. What are your hopes for the future, given what we've been discussing this afternoon?

Richard Turner: How, how long have you got? I'd be... 20 minutes. Yeah. I think the most important thing that's, that's happened, and this was happening before COVID was, was going on, so let's not...

Richard Turner: You know, Park it as something that's happened since COVID because you know, the people within this Within this webinar will agree with me. We've been pushing for industry wide collaboration for a long time And I think that's that's my one key hope going forward and I think it's it's within companies, as i've described between desks between you know different departments, often you know, it teams have been very siloed from the people at the coalface, like myself.

Richard Turner: And, and, and you know, back office staff, middle office staff and so on and so forth. And things like, you know, your clients as well. You know, there's a lot of work to be done there. So I think within companies, and I think also that the buy side have gotta get aligned a little bit better. So I need to speak to my peers and try and work out what problems we can solve together and, and solve it for the industry.

Richard Turner: And I think that aligned as well is on the sell side. I think the sell side probably need to get closer. And as a, as an industry, that means we all need to get a little bit closer and collaborate more effectively and, and, and also, you know try and benefit from you know, the, the, the, the having larger size to, to solve solve the problems.

Richard Turner: So I guess my hope is, you know, the industry comes comes close together. And I think as well that this, we could see quite a lot more cross asset solutions. Again, that's breaking down the walls between different trading desks. So I think that could be something for the future. I think more, more importantly, more pertinent to today's call is greater uptake of technology.

Richard Turner: And, you know, trying to embed it within your workflow solutions. I think the community needs to have a sort of a mind, mind, mind shift as well. You know, they have to stop sort of looking at risk and just being scared of it. I think we've alluded to that. A couple of people on the call have alluded to that and looking at the rewards that technology can actually.

Richard Turner: Give to your workflow solutions. So I think that's important and something else which I think again, we've had two or three people talk about on this call is standardization. I think without standardization we have you know, we we really we really haven't got a you know We can't start moving forward until we do have more of that and often with standardization and it's a key thing I take around Things when i'm looking at tca and data and so on and so forth We often have so much data we don't know what to do with, and I think that often the case of simplification is very useful, you know, and inherently, you know, more is less.

Richard Turner: And I think, you know, we need to really start to have a think about what data we're using, how we're using it, and in fact, do we need to use you know, the data we've got.

Host: That's quite the list. There's more. I'm sure, and we'll probably come back to that in a little while. Matt, can

Matthew Cheung: I come to you?

Host: What's your experience been recently of that collaboration between organizations?

Host: And also, you know, some of the things that Richard, they're hoping for the future. How do you see

Matthew Cheung: and those being delivered? I think in terms of collaboration, It probably picks up on that same point I made earlier where fintechs sit in between a lot of this conversation, you know, we're going back to that that fine line between risk and innovation.

Matthew Cheung: Obviously, if that's a curve, fintechs are on one end of it. So it's a way for bigger financial institutions to probably dip their toe into a certain extent. You know, we're involved in lots of conversations where it's kind of buy side, sell side and us or broker and sell side and us. And we're kind of sitting in the middle as an enabling technology and as a, as a standard.

Matthew Cheung: Going to the second point about how is this being delivered? I'll probably elaborate on kind of what Richard was saying about simplification. Simplification is. is key in any software, you know, if you can make something simpler, it's, it's, it's going to be easier to use. And we all know how, you know, people that are in the thick of it day in, day out, they're not that open to change sometimes.

Matthew Cheung: So you need to make it easy for them, but on that kind of data piece, which is kind of where we say, you know, data drives financial markets, but data sharing, you know, when we, when we've sat on a. sales desk or on a trading desk. Data sharing often hasn't changed much in the last few decades. You know, it still resorts back to those manual processes, which like Andy has said, are resilient because they work because you can throw people at it, but it doesn't scale very well because you do have to throw people at it.

Matthew Cheung: InPaste served us well for a long time. No, no, exactly. And it still does. You know, as much as Craig is bashing email. I love email. I think everyone loves it. It's a love hate relationship, isn't it? Everyone loves email, but you also hate it and you want to move away from it. I think though, in, in in the, in the world, some of the pre trade negotiation that we've been talking about.

Matthew Cheung: Yeah, this world of kind of historically got this nonstandard, complex trades like the packages or the baskets that we've been talking about that area has been neglected somewhat in terms of technology solutions, because it is difficult to standardize and automate. But I think right now there's a combination.

Matthew Cheung: of a, of a thriving capital markets, FinTech ecosystem. And because of this rapid transformation we've seen due to COVID and a few things kind of converging really means solutions are now available for those painful processes, which have fallen back to legacy way of working. I think the mind shift. The Richard talking about was already beginning to happen anyway, but it's just happening fast.

Matthew Cheung: I mean, I, as you just released the legend, you know, your, your kind of data open source projects a couple of weeks ago. So you've got institutions like that, the open sourcing thing. So. That mind shift is happening. I think it's now possible to unbundle now the data that is sitting in those legacy ways of working, the spreadsheets, emails, file share, voice chat, and then you can rebundle that data.

Matthew Cheung: And the tasks that were spread across those different applications into new structure workflows. So, so we believe the future state of technology is, is improving human decision making, you know, taking the heavy lifting away that someone like Richard has to do this essentially manual admin work. that you're having to do, that your counterpart on the cell side is having to do.

Matthew Cheung: So instead of having, you know, highly paid professionals doing robotic tasks, we can instead combine, you know, the human and the machine conversations, the messages, the data and put those all together and then eliminate manual processes, create and adopt standardization and then improve efficiency. So I think the ultimate goal for.

Matthew Cheung: You know, most technology providers really is to free up traders and salespeople to do the things that humans can do, you know, discuss the markets, give opinion, have a chat. The messy world of manual processes will then disappear. Execution will become frictionless. Sooner or later, those desks will also stop replicating the old methods of working like emails and files and copy paste.

Matthew Cheung: And instead, those new methods will then fit the new live and collaborative and interoperating tools that are now available. So it's a, it's a, it's kind of getting to this tipping point now where there's the mind shift, there's the technology. there's the push from COVID as well. And also people working at home, you know, you've got limited workspace or desktop on, you know, in front of you.

Matthew Cheung: So you have to become more efficient. So it's, it's, I think next year is going to be exciting year for. for this area.

Matthew Cheung: Very

Host: interesting. Something that I know from previous lives is traders and salespeople can be reluctant to to change at times. And Andy, I know you and I've discussed this before, and some of this is, comes down to that risk element. That that we have with rolling out new new products, if I could sort of speak to say I as Chris, Andrew from your experience, how do you handle pushback from people on desk when you're trying to roll out new innovative technology?

Host: Andrew, is that something you could comment on?

Andy Ross: Yeah, yeah,

Andrew Mosson: absolutely. I mean, look, I think it starts from the design phase. You know, I think if you, if you have the right people on board at the inception, then the whole process goes a lot easier. And I think obviously there has to be benefit both to, to the user and to their client as well.

Andrew Mosson: Without that, what's the point in the technology? So, you know, for me, it's fairly straightforward. Get it right to begin

Andy Ross: with. Yeah. Is there anything you can add to that Ayaz or

Matthew Cheung: Chris? Yeah, I think

Ayaz Haji: I think, you know, just building on that, you know, it's, it's basically impossible without the buy in of the desk, right?

Ayaz Haji: I think, like, you know frankly, if, if this is just pushed as a, as a technical exercise, it probably won't get very far. For the good risk aversion reason, like traders are there to manage risk. Right. And so, so I think that you know, really education around the benefits, the things that we've been discussing on this call.

Ayaz Haji: I mean, it's great even to see. Traders or ex traders on a call like this, like, would that have happened a few years ago? Like, I don't think so. So, there's a general technical, like, proficiency, data proficiency is continually increasing. As you know, as the world goes down the digitization route. And so, you know, there's going to be that tipping point as, as, as someone mentioned before, where, you know, the business is really going to get it.

Ayaz Haji: And I think the first people over the line are going to benefit a lot because, you know, they're going to, they're going to be the ones forming. this ecosystem, right? And so I think there's a lot of advantage to getting there quickly.

Host: Thanks very much for that, Ayaz. We've got a number of questions coming in from the audience, and I think what you were touching on there is goes to one of these quite well, which I'd like to put to Andy Ross if I could.

Host: So Andy, the question is was there any big bang slash catalyst moments in the electronic shift in equities, for example, that other more manually traded markets should be aware or take note of, or do you see it as a more gradual series of shifts as technology, such as the integration of the likes of Symfony and iPush pull helps facilitate that

Andy Ross: So let's talk briefly about about the futures market, you can say the same things about the equity market, but but the markets were built around trading floors of physical location and people used to stand around in bright colored jackets and wave at each other and there would be segmentations, you know, brokers and you'd be yours, mine bidding in exactly in the market out there would be would be

Matthew Cheung: hand signals and

Andy Ross: The, the reality was that that became inefficient with the movement to electronic trading and people didn't want to have to phone in a broker, they wanted to be able to, to trade electronically and that migrated off a floor and onto, onto a screen.

Andy Ross: But what then happened is that the innovation semi stopped. And so if you look at many markets, the liquidity doesn't exist in plethora of places, it still exists in the equivalent of a, of a floor. But look at newer markets, look at something like an OTC. Derivative market. There, the liquidity existed between bank desks talking to each other via someone like Chris, who's providing that kind of electronic marketplace for them.

Andy Ross: And there you have a plethora of choice, you know, whether it be iSwap, Trads, Bloomberg, whatever within that market structure. And so, I think there's kind of almost like a stratification of what was the prevailing market structure and what was the prevailing technology that existed at the time. Yeah. And I think that some of that has ossified and you get these kind of, oh, this is the way it's worked.

Andy Ross: And we migrate to this point and then you get this inertia because nobody wants to change it because it hasn't, if it isn't broken and there's a lot of risks that we've just discussed. What I generally believe is that the, the innovation of. Vast amounts of data, the, you know, I'm sure that everyone saw recently the Apple new M1 chip, right?

Andy Ross: This is a PC. In your room, in your lounge, at home, you can do, have a computer that can do a trillion calculations in a second. Five years ago to do that, you needed a helium cooled central core processor the size of your house to process a trillion things a second. Moore's law is changing the world and then you have the tools that like math has that I push pull that allow you to integrate things on top of that and, and, and the standardization that IAAS is talking about in terms of, of connectivity layers and processing between that.

Andy Ross: I believe that, that these, what I'm going to describe as, um,

Matthew Cheung: historic situations

Andy Ross: like exchanges or whatever are going to be competed against. fairly vigorously and being at an exchange, we're aware of that. And therefore we partner with our customers to be, to be in front of that change,

Matthew Cheung: not behind it.

Host: Yeah. I think that's very interesting to say the least. And you know, that idea of having a trillion. a Second going on in the in the house is certainly a big changer. Another question we've got coming in, and I think this should be a good one for Richard and probably Chris, actually. Because I think IAS has had his say on standardization so far.

Host: And what's the best way, in your opinion, to achieve standardization in the industry, and should it be driven by a consortium of firms? Thank you.

Richard Turner: Well, I think yeah, I think in the first instance, the, the idea around standardization you know, comes from a problem you've got across your workflow on your desk.

Richard Turner: And I think at that point you know, you start to define the problem. I then think, you know, along that line, you've got to find somebody who you can collaborate with to deliver the solution to your problem. And then you industrialize it. I, you, you know, you, you'd look for peers and see who has a similar problems and And what it is, but I think with all these things, I said earlier, I think, um, you know, if you just take transaction cost analysis as an example, I mean, when you're looking at child order fills there, you only really need a few a few bits of information, five key pieces of information in order to standardize it doesn't mean you don't potentially want more, but I think the fear in the first iteration, you need to just.

Richard Turner: You know, almost walk the walk and do the trade walk through the trade itself and come up with what are the five key pieces of information you need and then build on that, you know, have you start off with a standard five bits of information and then say, Well, actually, what else is pertinent? What else is useful?

Richard Turner: And slowly you'll get an improvement in the amount of information that you can take on board. But regardless of that, even though we can do a trillion calculations in a second now, I think we have to be careful that we don't, you know, fill these sorts of standardizations of forms, if you like, with too much information that's not relevant.

Richard Turner: As I said before, I think less is more. So I think the key question there is, as I say, to summarize is, you know, have the idea. Try and find a technology provider that will, you know, grant you a solution and then, and then, you know, I think you've got to be open and collaborate with your peers to say, Look, I've had this idea of you've got this problem around this workflow solution, and I think nine times out of 10, you'll find that the that your peers will, will have the same problems and, and again, it could be a cross asset.

Richard Turner: It could, you know, there could be any, any amount of uses for that, that, that problem that you solved. So I think the key is just, as I said before, collaboration.

Host: Thanks, Richard. Chris, just, just a quick one, same thing to you, is do you think that's better done with a consortium a little bit like a fixed protocol, or do you think to Matt's point, there is a little bit earlier, there's innovation going on all the time, and, you know, as people start to collaborate with each other, it will filter out almost by osmosis.

Host: I think

Chris Scott: it depends on what you're standardizing and fix is a very good example of kind of standardization of message formats, but it doesn't truly do is standardize processes and workflows and kind of the experience we're having with a lot of our customers is that trying to standardize the message formats is actually the struggle.

Chris Scott: Everyone has their own internal systems. And they need a spreadsheet, a message, however delivered in a certain way, in a certain format. So their machine, they can copy and paste it into the kind of next part of their workflow. I actually think that the kind of standardization really does start where we adopt kind of the same platforms to deliver these workflows via.

Chris Scott: So, Symfony is a good example, OpenFin. By using those and kind of starting there, we can deliver custom messages, but in a more kind of standardized way, and that in turn will actually start teasing out. Actually, here's where we can kind of standards. Here's how these other firms are operating with this platform.

Chris Scott: Here's how it's already working. You can just take it and use it. I think that kind of standardization of communication channels and kind of delivery mechanism. Is actually where we're going to kind of see most innovation and most adoption is probably the most expensive part for any firm, be it a venue or a bank trying to integrate and figure out against 10 brokers, 10 exchanges and run all those concurrent connections.

Chris Scott: It's expensive, it's time consuming for a trader to have several different chat platforms with dozens of rooms in each. It's inefficient, whereas if you can deliver your products and services via a single portal. It represents a huge gain in efficiency, reduction kind of risk and kind of more time free to invest in the right areas.

Chris Scott: But I think we'll be stuck with kind of messages and formats driven by certain banks in their own way for a long time to come. I think consortiums as well have proven themselves that they work well ish. However, you get situations where you get kind of some banks going off and doing one and others go, well, I'm not going to join in because they're my biggest competitor.

Chris Scott: And they go and start their own consortium. So I don't think that approach works well frequently. FIX is a good example, it's working well. But there are many other kind of alternatives to FIX that have come about over the years and are actually adopted more by some of the exchanges for some of latency trading.

Chris Scott: So it's, it's what you're standardizing, I think, is the key

Host: thing to look at. No, that's that's really interesting. And that, that combination of... of answer from both yourself and Rich. I think it's been very useful for the conversation. We're running out of time. We've probably got about another two or three minutes.

Host: I've got a question here that I'm going to put to Craig. And then after that I'd like to go to Matt just to do a sort of summing up of the, of the conversation we've had. Before we say thank you to all our panelists for the afternoon. So, Craig, can I hit you up with this one? And I'm going to read it.

Host: It's a little bit long, but you'll, you'll get the, you'll get the idea. It's has the arms race on technology for cheaper, faster, quicker driven. the market, driven the market towards more business off screen as most participants can't compete. So is there actually need for more pre trade negotiation?

Host: Wow, there's a question

Craig Butterworth: to throw.

Host: There is a question for you.

Craig Butterworth: Look that's, that is definitely a question that requires proper digestion. I think trying to tackle it though in, in like one minute or two minutes. I think if you look across the different asset classes, right? And we touched on this thread earlier, right?

Craig Butterworth: Equity is clearly of all the asset classes or equities, I guess, FX, right? Both in different ways, very standardized. You look at markets like credit, for example, right? Bank loans, et cetera. You know, they're, they're hugely imperfect markets, right? And so the, the different blend of challenges around. Let you know analytics trying to find liquidity exit, you know, the whole reporting post trade that whole type of piece, you know, they all have their own little mini microstructure beneath them.

Craig Butterworth: And some of those are again, hugely inefficient. And so. You know, there are hugely important asset classes that are not traded on exchanges that you know, requires some pretty urgent digital transformation. So I think there's a lot more work for us all to do together. And to be honest, I think, you know, some of the stuff that I push pull are doing in the LDI market, whilst that is a subset of the rates market, actually, some of the approaches that I push pull are taking with the firms that are working on it.

Craig Butterworth: I think actually can be applied to a lot of other asset classes. It's more about establishing that tooling and that fresh mindset. And then I think there's plenty of other UK use cases we can go to next. Maybe I'm dodging the question a little bit, but that's a big question.

Matthew Cheung: Well, well

Host: answered, and I'm sure there's plenty of time to have more discussions on this down the road next year as we move forward with that.

Host: Before we say thank you to all our participants and attendees this afternoon, Matt, could you just give us a sort of summary, a sort of summing up of the discussion we've had this afternoon, and just wrap up for us,

Matthew Cheung: please. Yeah, sure. I think we all agree like this this year, there's been lots of pretty bad things have happened in the world.

Matthew Cheung: But in terms of what we're focusing on our this discussion with pre trade, you know, client workflow standardization, you can see there's a lot of things going on across, you know, buy side sell side brokers, tech vendors, exchanges. Every part of the trade life cycle, every participant, there's something going on that mind shift like Richard was talking about is beginning to happen.

Matthew Cheung: I think just summing up probably what we've heard. You have this risk versus innovation kind of, you know, where's that sweet spot? Because, you know, in a highly regulated world. There's only so much risk you can take, but on the other side, you might have some OTC derivatives, which still rely on these old legacy processes.

Matthew Cheung: Like Chris was saying, you need to be selective about which problems you want to solve because development resources are premium. You need to maximize your winners. You need to limit your losers and don't be afraid about the losers because the losers is about products. Rather than technology. Andrew's talking about when the solutions are being designed, you need to work with all the players.

Matthew Cheung: You know, you'd be working with the guys on the, the guys or gals on, on the desk. You need to be working with the traders, with the salespeople. You need to be providing benefits to the users and the clients. And then I suppose your. looking to utilize Fintechs to deliver or help enable and accelerate some of these solutions.

Matthew Cheung: You know, Fintechs, which can deliver things fast to market which can help adopt or conform with standards or even create or standardize the standards. So look at what Fintechs are doing, work with them. They can often be that. that that key point in the middle of conversations, which can help sit alongside pretty some of those kind of consortium type discussions as well.

Matthew Cheung: But yeah, an exciting year for, for, for 2021. Thank you panelists for, for joining. We appreciate it a lot here from my pushball everyone in the audience. Thank you for taking the time to listen and we can kind of sign out from there. That's brilliant.

Host: Well, thank you very much indeed, Matt.

Host: Can I just remind everybody that the Financial Markets Insight Report is available to download. And you can see that up on the screen there with contribution from people across the panel today. And you know, you can go into more depth some of the some of the things that we've been discussing.

Host: So without taking up any much more of your time, panelists, as Matt said, thank you very much for joining us today. And thank you very much for what was a really, really interesting discussion we could have gone on for a lot longer. And thank you very much indeed. To the attendees for joining us today.

Host: And there was a, there was a great number on this afternoon. So yeah, it looks like it was a very interesting conversation for, for everybody involved. Thanks very much. And do you guys have a great rest of the day?