A Simpler View of Complex Markets - Q&A with Fidessa's David Polen
Whoever said technology would make our lives easier didn’t trade futures and options on five or six different exchanges spread out across a dozen different time zones. Thanks in large part to universal connectivity market participants can access liquidity in virtually any asset class anywhere in the world. But with that capability comes a great deal of complexity. Different regulatory regimes, trade processing requirements and various technical intricacies give each asset class in each market around the world a unique set of rules that can challenge even the most sophisticated market participants.
Recognizing the need for global reach without the technical and regulatory complexity that comes along with it, Fidessa is hard at work to help guide clients in the new world order of electronic trading. DerivAlert caught up with David Polen, global head of electronic execution to discuss how the industry is simplifying global markets.
DerivAlert: You’re in a new role at Fidessa as global head of electronic execution. Tell us more about the direction you’re headed
David Polen: This is all about taking the next step in helping our clients access markets more efficiently than they ever could have done before. Whether you are trading Treasurys in New York, equities in Brazil, or futures and options in Japan and Australia, you want to have a reliable framework. We want to make accessing these markets as consistent as possible so our clients can focus on trading instead of navigating technicalities.
DA: Ironically, just as technology has made it easier than ever to trade electronically around the globe, regulatory reform made it more complex than ever to execute trades; is that phenomenon driving your thinking at Fidessa?
DP: Fundamentally, we’re dealing with market structure issues and compliance issues. You need to be able to understand how those variables work together before you can start to make it simple and give clients a normalized view of hundreds of different markets. That’s the value we’re bringing: we’ve organically solved many of the most challenging execution issues from a compliance perspective so we can bring all of these markets together in one place electronically.
DA: What markets are you currently serving and where do you see yourself expanding?
DP: For electronic execution, we cover equities, futures and options, liquid equity options and Treasurys across 220 markets around the globe. We’re continuing to expand this list into several asset classes. Swap Execution Facilities (SEFs), for example, are an area where we see tremendous potential. We believe the buy-side wants to be able to trade electronically globally, and brokers want to facilitate those global trades instead of running different stacks for each market.
DA: How are you improving efficiency for brokers in these markets; can you give us an example?
DP: Let’s take futures, for example. For a client located in Chicago, whether that client wants to execute a trade on the CME or wants to execute in Hong Kong, they send a Direct Market Access request into the Fidessa cloud in Chicago and, using co-location hubs located around the world, we provide access to over 40 futures markets with very low latency. We can make that experience very consistent with what they are doing in equities, Treasurys, etc. And then we can provide post-trade analytics that let them benchmark performance. It’s really about making the workflow more efficient for our clients so they can focus on the markets.
DA: What do you see coming down the pike over the next year to eighteen months?
DP: We’re committed to continuing to expand into new asset classes, in a world that is moving quickly into electronic trading. Our philosophy is that there is enormous value in giving our customers a consistent execution framework and a simple, normalized view of these markets so they can focus on their business and value-add instead of infrastructure issues.