The global financial services industry will witness a wholesale move from an attitude of regulation and compliance to one of growth and profitability in 2018, according to Beeks Analytics (formerly Velocimetrics), a leading provider of business flow tracking and performance analytics.
Financial firms have spent years getting up to speed on MiFID II and jumping through the requisite regulatory hoops, but following the January compliance deadline, will focus on assessing the cost of regulation to business and the strategies they can deploy to grow and improve margins. Other predictions from Beeks Analytics include:
- Transaction Cost Analysis (TCA) set to become next “big thing” post MiFID II: Transaction Cost Analysis (TCA) is set to become the next big focus for investment banks and exchanges in 2018. MiFID II has demanded that institutions that carry out transactions on behalf of their customers ensure they take all reasonable steps to obtain the best possible result, taking into account factors such as price, cost, speed, likelihood of execution and settlement. Best execution is a key focus for financial firms and TCA is fundamental to helping financial firms achieve that.
- ‘Tick to Trade’ to become key metric for measuring profitability: ‘tick to trade latency,’ the time interval between receiving a market tick and sending the buy/ sell order, will become a key indicator of network performance in 2018. Driving down ‘tick to trade latency’ will help firms trade with a significant competitive advantage and therefore help improve profitability.
- Clock synchronization will become pivotal: in order to efficiently timestamp different changes of events – initial client order, decision to deal, when deal is made etc – they have to be timestamped to within 100 micro seconds of accuracy. When institutions are dealing with multiple clocks in an extremely complex environment, the ability to synchronize clocks is essential. This will help banks adhere to regulation, in addition to helping trading systems run more effectively.
Steve Colwill, a representative of Beeks Analytics, comments: “The industry has had enough of spending on regulatory compliance. Regulation is obviously non negotiable, but now that the MiFID II deadline has passed, firms can re-focus on how they can boost growth and the solutions that will help them do that. Improving transaction trading performance is key and issues such as TCA and tick-to-trade will help institutions on the road to profitability.”