Developing regulation, the evolution of ESG, and improving and standardizing data and analytics are among front-burner topics for buy-side traders in the second half of this year and beyond.

That was the takeaway from the “Next Steps for the Industry” panel at the June 23 FIX EMEA Trading conference.

The first, and most tangible, order of business is managing the post-pandemic return to the office, and how the ‘new normal’ will look different from the ‘old normal’ of 16 months ago.

“There will be a new flexibility which we all have to maneuver,” said Eric Böss, Global Head of Trading at Allianz Global Investors. “This can improve trading performance and resilience. (COVID-19) has been a fire drill for trading infrastructure, and across the industry. One of the most positive surprises is that the number of negative trading instances has been so low.”

Joe Collery, Head of Trading at Comgest, said there are no hard and fast rules about how people will return to the office — rather, decisions will be made by locality, firm, and even teams within firms. “The commute has not been missed, but what we’ve lost in person-to-person meetings, we’ve gained in the fintech vendor space,” Colliery said.

Christoph Hock, Head of Multi-Asset Trading at Union Investment, said a key challenge for both the buy side and sell side is raising the bar on how firms collect raw data and then leverage analytics to deliver best-in-class execution.

“This is all about partnership and collaboration,” Hock said. “Asset managers and the sell side all have the same goal — to ensure that we serve investors in the very best way.”

With regard to regulation, Hock said the MiFID review is an area to watch, as there needs to be a pragmatic approach to improve market structure without burdening the functioning of markets.

Another area where a balance needs to be struck is the proposed consolidated tape for European bond trading, Böss noted. The end goal must be enhancing transparency while minimizing adverse selection in trading.

“The level of standardized data we all can use is at the core of the issue,” Böss said. “Data is the language of financial markets; we need more standards in how data in fixed income markets is collected and used.”

Böss estimated that there is broad agreement on 90% of what needs to be done in this area; the industry needs to focus on the remaining 10%.

Regulatory fragmentation, due to Brexit and other situations such as U.S. sanctions on China, is a headache for financial institutions. “We are used to capital markets with too many platforms, but now regulatory fragmentation is more of an issue,” Böss said. “It is making our lives increasingly difficult, and expensive.”

Another area that requires industry collaboration is ESG, which Hock said has recently moved from a discussion for portfolio managers, to one that has also become highly relevant for the trading desk.

“This topic clearly affects the industry as a whole — buy side, sell side, platform providers, exchanges,” Hock said. “We need to work together to define the very best standards.”

Overall, panelists expressed optimism about how the financial industry weathered the unprecedented disruption of the pandemic, and what lies ahead.

“This is such an exciting time for our industry,” Collery said. “We have a lot of work to do, both in FIX working groups and collectively. But the onus is on us as a community to go forward and keep innovating. We can propose solutions in a collaborative manner with regulators.”

“We talk a lot about data and technology and automation, but we also need to recognize that we’re in a business where humans interact,” Hock said. “People are happy to get back to the office.”

Buy-Side Traders Look Ahead first published on GlobalTrading.