2020 Outlook: Paul Lynch, Itarle
Paul Lynch is CEO and Founder at Itarle.
What were the key themes for your business in 2019?
In 2019, Itarle’s focus once again was on regulation’s impact on sell-side institutions. With regulators particularly concentrating on MiFID II and RTS 28, the spotlight was on and firms needed to ensure proper compliance. As a result, Itarle continued to see growing demand from firms that value the performance and cost benefits of outsourcing high-quality, best execution services and transaction cost analysis over in-house development.
Itarle also focused on identifying the right metrics for effective futures execution and demonstrating how technologists can optimize algos even further.
What are your expectations for 2020?
As the impact of global regulations continues to grow, TCA tools will become increasingly important for investors looking to make responsible investment decisions. Firms need to normalize execution processes around TCA to ensure silos are broken down across asset classes.
We also anticipate the LIBOR replacement and implementation of alternative benchmarks to be the main disruptor in the futures markets over the next 12 months. Broader capital markets should be paying attention, as from a technology standpoint, firms need to start preparing now.
What are your customers’ pain points and how have they changed from a year ago?
Over the past year, our clients faced increased pressure to meet regulatory requirements and keep up with evolving developments in the market. Banks are expected to operate many aspects of day-to-day business, from trading to research, utilizing the latest technologies such as Artificial Intelligence.
Many of the Sell Side traditional roles will remain. However, independent providers allow firms to outsource these technology intensive, niche parts of their business and alleviate some of the increasing cost pressures facing them.
Firms are accelerating the buildout of digital transformation strategies.
Expect to see several new entrants in the equity exchange landscape.
CEO sees big potential for financial innovation in digitized assets.
Capital markets will continue to integrate and globalize.
SFTR implementation and the demise of LIBOR will be key themes this year.