Securities tradingoutlook six_v01

Securities tradingoutlook six_v01

• 1.
  Present and futurechallenges for securities trading Fredrik Koch Head Product Managment Nordics, SIX Financial Information Stockholm 11 September 2012
• 2.
  Stops 1. Challenges, background 2.Impact on… • Business models • Data and product strategies • IT infrastructure 3. Conclusions Stockholm 11 September 2012, page 2
• 3.
  Russian for Swedes •Swedish Smorgasbord • Swedish Wall • Swedish Family Stockholm 11 September 2012, page 3
• 4.
  Background • Financial sector still a youngster • Highly regulated untill 80’s • Deregulation followed by steep growth, high earnings, limited risk managment, no cost control… • From being the lubricant to becoming a machine itself • Now in a contracting phase pressured by Economical, Regulatory and Infrastructural factors • Stop sulking, it is all part of growing up! Stockholm 11 September 2012, page 4
• 5.
  Trading problems remainunchanged • Expand revenues from front-office operations while minimizing total trading costs including fees, spreads and market impact • Ensure that the business operate within agreed risk and regulatory boundaries • Process business transactions in a timely and cost-efficient way Front office Middle office Back office Research, decide and trade Manage and protect Clear, settle and report Expand revenue Control risk Reduce cost Business drivers Stockholm 11 September 2012, page 5
• 6.
  Then and now • Months and days  Microseconds • Risk free  Shared risk • Connect to the right people  Connect to the right platforms • Uninformed clients  Self-supporting clients • Low volatility, high interests  High volatility, low interests (chart) • Deregulated  Reregulated • Spreads, Fees and Volume DOWN, Costs and Risk UP • License (cost) to operate growing – Solvency/Capital, Regulatory, IT… • ”Traditional” activitities outcompeted or no longer requested • Stuck in the middle of shrinking margins and increasing costs Stockholm 11 September 2012, page 6
• 8.
  Market trends, impacton business models • Response 1: Grow to defend, expand your service offering • Response 2: Focus and outsource – A “boutiquified” market • Who wins? 1. Clients / Investors 2. Infrastructure Operators 3. Legal/Compliance advisors Stockholm 11 September 2012, page 8
• 9.
  Regulation – Thewinner is…. Your legal advisor! Stockholm 11 September 2012, page 9
• 10.
  Products – Offerings– Channels • Bonds growing, investment grade and unrated • Improved secondary market required • Shorten issue/borrowing process • Funds • Passive vs active • Performance fees • ETF’s • Private banking growing but from low numbers • Banks growing in private/retail trading through on-line services • Multi-channel, 24/7 • Reduced costs for post-trade • MiFID etc drove down the trading cost • 20/80 split between trading and clearing/settlement • Expect more players and lower prices Stockholm 11 September 2012, page 10
• 11.
  IT • Fairness / access times, needs regulation? • 45% of all inst trading in Europe today is done through algos • US is ahead, Sweden / Nordics still behind • Open standards for application and data integration • FIX, ISO, SWIFT • BLPAPI / BSYM • Outsource! Stockholm 11 September 2012, page 11
• 12.
  Conclusion and summary • Fundamental challenges remain (minimize trading costs, spread and impact) • Securities markets are leaving infancy, efficiency through IT and regulation • License to operate growing • Traditional activities outcompeted or no longer requested • Grow or specialize • Regulation tsunami • Competition in post-trade • IT a driver for change • Consider outsourcing Stockholm 11 September 2012, page 12
• 13.
  Russian for Swedes(answers) Swedish Wall Swedish Smorgasbord ? ? Swedish Family ? Stockholm 11 September 2012, page 13
• 14.
  Thank you! Questions?