Outlook 2018: Jonathan Clark, Luminex Trading & Analytics
Jonathan Clark is CEO of block-trading venue Luminex Trading & Analytics.
The new year will be known as “The Year of … ?”
It will be known as “The Year of the Human.” Despite the AI talk, human traders will have a good year against the bots. Humans will have a big role in finding creative ways to source liquidity, and we’ll need human hands on the tiller to handle higher volatility and wider spreads.
What do you view as the most important lesson of 2017?
There are three big lessons from 2017, and they’re all reminders of some pretty basic truths: you need to better protect your data and information from nefarious people; the appetite for people to buy things they don’t understand (in this case, bitcoin) is insatiable; and a president’s job approval rating has nothing to do with how well the stock market will perform.
What changes do you expect to see in regards to trading in 2018?
While we expect modest changes to trading from continued technology improvements, on the regulation front, we expect tighter regulation of investment advisors (both human and robo), and a renewed focus on payment for order flow and exchange rebates, particularly on the exchange side.
What do you expect to be the skill sets most in demand in 2018?
With “do more with less” continuing to be a mantra, individuals with a broad array of skills will continue to be highly valuable. Beyond that, tech skills will be essential; if you understand data management, the development of order routing and the usage of algos, you will be a hot commodity. Security and integrity of operations will be paramount to firms, with the role of chief information security officer (CISO) really earning its C-suite designation.
Will Wall Street return to focusing on innovation to drive alpha in 2018? Why or Why not?
The focus on innovation will continue, but the importance of humans to the process will actually accelerate. Quant investing will continue to come back into vogue as investors like the idea of index-like returns with an opportunity for some amount of alpha. But innovation could really make things click for Fundamental Managers this coming year, see them crack the code and get ample outperformance versus their benchmarks.
Which market structure changes do you expect to take place in 2018?
We expect to see some exchange consolidation. On the regulation front, we think the Access Fee pilot will continue to be discussed, and details will be rolled out in 2018, with implementation in 2019. The issue of payment for order flow could move to center stage, and it might not look so good in the spotlight.
Agency broker moves beyond execution to offer a broader suite of services.
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They can be used on quantum hardware expected to be available in 5 to 10 years.