Buy-side firms can face a number of challenges. Usually it depends on how deep they want to electronify or automate their operations. And although each firm is different, we’ve found that they tend to follow the same sequence when adopting technology for trading. This is essentially a 3-step process: Electronification, Aggregation and Analytics.
At the electronification stage, they are replacing manual and voice workflows. This usually starts with RFQ negotiation and straight-through-processing (or STP).
At the aggregation stage, they want to simplify access to multiple liquidity pools. This can start with RFQ staging, aggregation of market data, and moves to advanced execution logic, using tools such as an EMS. We also see more requests to provide liquidity and not just be a price taker.
Finally, buy-side firms want to use more of the data that is now available to them. This can be to look at current and historical prices or to analyse their trading. At this stage they tend to look at analytics tool. Ideally those should also help them with the regulatory requirements they have to fill. And help them be more cost-effective on the long run.