Baird’s Jack Miller Offers 2020 Outlook


So, what does the future hold for the equities market?


Jack Miller, Head of Trading with Baird, shared with Traders Magazine some of his thoughts on what he saw as the biggest news and trends to emerge this year, as well as what’s high on his list of topics to watch in 2020.

Jack Miller, Baird

First, Miller looked at regulation as 2019 focused on Rule 606 acceptance, approval and compliance and also Rule 611. He said 2020 will be the year of data.

“Debate around key rules wound up somewhat tempered this year by a series of delays,” Miller began. “While no one likes the feeling of staring at a stopped clock, there is something to be said for a more deliberate approach where many of these rules are concerned. Not to be lost in the waiting game, however, is the fact that all of these significant changes are only going to make data and the ability to assimilate and process that data all the more important. It’s not a stretch to predict that 2020 will be the ‘year of data’ in the trading world.”

Next, Miller, a trader himself, discussed there will be a focus on how to improve trading in small-cap equities. Small -caps, which don’t benefit from as much research and liquidity, are often more difficult to trade when compared to mid- and large-cap stocks.

“This will be a major topic to watch in 2020 and the SEC has already made it clear that this is a priority,” he said.” There is a growing realization that a one-size-fits-all approach to market structure doesn’t work across all market caps.”

And what about the buy-side? While the sell-side has spent several years undergoing radical transformation from think multiple silos and bespoke personnel to a more electronic trading consultant approach, the buy-side is now also changing. Constrained spending, competing for broker attention and massive technology spend on data and data manipulation are among the chief worries.

“I’ve been talking about this for a while, and the trends that have changed the role of the buy-side trading desk only accelerated in 2019 and appear ready to gain even more steam in 2020,” Miller explained. “Key among this discussion is the explosion of data and the growing expectation that all trading decisions will find support within that data. It’s a trend that presents great opportunities for those teams that are embracing data and harnessing it to its full potential.”

Lastly, Miller said the exchange marketplace and trading venue space will continue to undergo change. And while at first it seemed like consolidation was the way things were headed, the converse has happened. The advent of new marketplaces can afford the buy-side better and cheaper opportunities to trade.

“I think conceptually the entry of some new competition is a good thing, and while the three major players – NYSE, NASDAQ, CBOE – are likely to remain firmly entrenched, the competition will be good for all since it’s going to force all of the exchanges, both established and new, to think about the approaches and services they need to offer to grow, or in some cases keep, their clients. That said, this will only add to the debate surrounding connectivity costs and exchange proliferation in general.”

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