Ecosystem Looks to Boost APIs09.12.2017
QuantHouse forecast that the buyside will be adopting API technology in the next ten to 15 years as the firm launches an ecosystem to accelerate API use in trading.
Stephane Leroy, business co-founder and chief revenue officer at QuantHouse, told Markets Media: “In the past 25 years technology has been screen-based as users have been human. Our new initiative is to link users who are robots through APIs.”
QuantHouse provides systematic trading infrastructure solutions including ultra-low latency market data, algo trading development frameworks, proximity hosting and order routing. The firm has launched its ‘qh API Ecosystem’, which is designed to accelerate the adoption of multi-asset class API-based automated trading tools, AI and machine learning services. Leroy continued that ecosystem is being used by 550 companies, including prime brokers, buyside and exchanges, which he said is the largest network of API users.
“This transition is already taking place but the API ecosystem will accelerate this process and expand the community of users,” added Leroy. “For example, firms now need separate APIs to connect to the LSE and Euronext but the Quanthouse API Ecosystem will provide a ‘one size fits all’ API connection process.”
As a result of this acceleration, Leroy predicted that the buyside will start to adopt API technology in the next ten to 15 years. He added: “But human portfolio managers will not have disappeared.”
Leroy continued that Quanthouse’s API technology also makes it easier to meet MIFID II requirements such as trading on new venues, finer time synchronisations and new stress tests when the regulations come into force in the European Union at the start of next year.
Stéphane Boujnah, chief executive of pan-European exchange operator Euronext, said in a speech at the Trader Forum in Barcelona last week that exchanges must think differently as regulation is about to drive deep change in market structure and shift more assets to organised transparent markets.
“Like in any other industry, technology is compressing the value chain and making it more transparent – bringing the buyside closer to issues of market structure,” he added.
MiFID II places double volume cap limits on equities trading in dark pools and Boujnah said platforms must help institutional investors find and execute block trades more efficiently.
“But rather than predicting the death of dark trading, Euronext believes there will be an evolution of market structure to accommodate dark execution strategies within the MiFID II framework,” he added. “Dark execution strategies respond to specific market needs to reduce market impact through information leakage and to lower transaction costs. These needs are not going away.”
To meet these new requirements the exchange operator has launched Euronext Block, a regulated venue to allow institutions to trade blocks proactively.
“Users can invite trusted counterparties to submit block liquidity using Euronext Block’s Invitation to Trade (ITT) mechanism,” added Boujnah. “Euronext Block will support both buyside and sellside trading communities by bringing liquidity together in a single order book allowing true price discovery as well as enabling potential price improvement.”
Christian Voigt, senior regulatory adviser at Fidessa, said in a blog this month that block trading is likely to gain attention, and might even see “another golden age” under MiFID II, as large-in-scale trading is exempt from the dark pool caps and some transparency requirements.
“The regulatory burden for dark trading below the LIS barrier will increase due to the double volume cap,” said Voigt. “But even more importantly, equities deemed liquid by Esma will have very few options other than block trading above LIS.”
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