2015 Outlook: John Bates, Software AG
Dr. John Bates is chief marketing officer at Software AG, a provider of enterprise software technology.
What were the major themes of business in 2014?
Scandal, shame and mitigation shaped 2014. Trade surveillance and risk continued to be top of the agenda.HFT shame deepened as uber writer Michael Lewis released his Flash Boys, saying the market is rigged. Market scandal continued; FX and metals manipulation, along with more mini-‘flash crashes’, also continued.
What are your expectations for 2015?
I think the tide has turned. We’re going to have a much more boring year and a movement up on the shame-pride index. Here are some of my predictions:
The Fall and Rise of HFT: A new avalanche of books de-bunking Flash Boys, which claimed that HFT markets are rigged, will exonerate the practice. A new tranche of players will enter the market, using the Securities and Exchange Commission’s new guidelines as armor.
Boring is the New Black: The Wild West days of banking will be a distant memory as next year’s bankers will continue to avoid risky practices in the face of regulatory scrutiny. They will revert to wearing bowler hats and carrying umbrellas. Real-time cross-border, cross-market surveillance will be a must have, not a nice to have, to keep the CEO out of the headlines.
A Hedge Fund Will Be Saved by a Self-Learning Algorithm: In 2015 algorithms will become smarter. Fast trading will include self-learning risk frameworks that can detect and shutdown any rogue human or algorithm behavior.
The Internet of Tractors Changes Things: The Internet of Things will come to commodities markets and connected machines will begin feeding valuable information to traders. For example, tractors will tell commodities traders how the crops are faring.
The FBI Swallows the CFTC and SEC: Having failed to rein in markets fraud, the U.S. Commodity Futures Trading Commission and U.S. Securities and Exchange Commission will be forced to work for the Federal Bureau of Investigation to help catch the perpetrators.
Agency broker moves beyond execution to offer a broader suite of services.
Algorithms have become more prevalent in the spot FX market.
QB’s Algo Suite for futures market trade execution is also being co-located to HKEX.
Breaking data silos is key to deploying automation beyond 'nuisance' orders.
They can be used on quantum hardware expected to be available in 5 to 10 years.