Outlook 2019: Robert Dykes, TORA01.02.2019 By Rob Daly Editor-at-Large
Robert Dykes is the CEO of TORA.
What was the most important lesson of 2018?
In 2018 we saw the implementation of MiFID II, which was a big deal for OEMS vendors and their clients. Not only did it raise the bar for best execution bar, but it implemented complex new trade and transaction reporting requirements. To become compliant, buy-side firms had to upgrade their OEMSs, implement new advanced trading tools, integrate with a host of new partners and even update their FIX specifications. For buy-side firms that were heavily invested in legacy OEMS platforms the work needed to get ready for MiFID took the better part of 2017 and a good chunk of early 2018.
For TORA’s clients, however, it was a much different story, with the work necessary to prepare for MiFID II taking a fraction of the time. So, from our perspective, one of the most important lesson learned in 2018 had to be that it’s now time for firms to adopt flexible, easily upgradable and cost-effective cloud-based solutions. Given the struggles that many firms had preparing for MiFID, and the realization that regulations will continue to change in Europe and in other markets around the world, transitioning OEMS capabilities to a cloud-based solution is a strategy that seems more practical every day.
What changes do you expect to see in regard to equity trading?
To remain competitive in 2019, traders will need to focus their attention on where they can add the most value. To do that, they will need automated trading solutions they can trust to achieve the best execution for the bulk of their orders.
We are seeing trading desks embracing artificial intelligence and machine learning algorithms to automate and improve the efficiency of their operations. The AI-driven tools we offer at TORA to assist clients with pre-trade TCA and algo selection are being rapidly adopted and we anticipate the appetite for tools like these will increase in 2019.
Will 2019 be the year of Institutional Crypto?
The digital asset space has seen explosive growth over the past year – over 200 crypto-focused hedge funds have been formed as of February 2018, average daily exchange-traded volume across all crypto assets surpassed $18 billion USD equivalent and traditional trading houses continue to express interest in increasing their exposure to blockchain assets.
However, crypto investors were lacking the crucial tools necessary for the space to achieve its potential. Key among these were professional-grade trade execution, compliance, position and risk management, and reporting functionality.
In the first quarter of 2018, TORA formed Caspian, a joint venture with Kenetic, a leading blockchain and cryptocurrency hedge fund and investment firm. Together, we focused on building an OEMS that would overcome these challenges plus provide the needed connectivity and interoperability across the various digital asset exchanges. We are now able to offer institutional clients a full-stack crypto trading and risk management platform that is being very well received by clients including Octagon, Asia’s largest OTC crypto fund. We believe the Caspian platform, along with the advancement others are making to crypto custody solutions, have the potential to make 2019 the year of institutional crypto.