Flying high in the face of adversity
The unprecedented cost
pressures faced by institutional investors has prompted greater demand for new
and innovative services from technology vendors, says Megan Costello, the
recently appointed president of Fidessa’s US buy-side business.
Costello was promoted
to her new role on 2 August having previously been responsible for the
technology vendor’s buy-side client services. Prior to joining Fidessa, she was
executive director of global integration at back-office processing solutions
In her new position,
Costello plans to use Fidessa’s existing capabilities – such as the firm’s
global broker network, access to liquidity, proprietary data centres and
sell-side expertise – to help meet the buy-side’s rapidly evolving needs.
are getting more complex: all buy-sides are multi-asset class and the
advantages of multi-asset trading are clear,” says Costello, adding that
globalisation and diminishing investment returns in western markets are also
leading the buy-side further afield. “A diversified portfolio offers both
significant speculative and hedging opportunities and many asset managers are
keen to exploit the benefits of incorporating several instrument types into a
While the equity markets have led the way in
electronic trading, new regulations – such as Basel III, MiFID II and the
Dodd-Frank Act – will reform fixed income and OTC derivatives market, leading
the buy-side to reevaluate their trading processes and counterparts.
To help meet these needs, firms that provide
technology solutions for the buy-side need to ensure they have a broad
connectivity network to help connect investors to a diverse array of
counterparts across the globe.
need for speed
But it is not just the quality and breadth of
connectivity that the buy-side craves, asserts Costello, it is also the speed
at which new services can be delivered – an issue that she says Fidessa has paid
a lot of attention to, especially for the Buy-Side Workstation, its
broker-neutral execution management system.
“Innovation no longer counts for much if there is a
delay while connectivity is arranged,” suggests Costello. “In a market where
opportunities are lost in three minutes, a three-month period to build and test
the underlying connectivity arrangements is fatal. Buy-side firms are
increasingly demanding instant access to new strategies.”
Systems also play a key role in onboarding trading
partners. The addition of new counterparts requires the evaluation of the
services they offer, calling for the standardisation of real-time and
post-trade transaction cost analysis and information of execution costs, says
But institutional investors’ desire for technology
services that meet the multi-asset revolution has been disrupted by a continued
need to drive costs down and comply with the raft of new rules that are
steadily being introduced.
“We have seen buy-side clients look towards regulation
on compliance and pre-trade automation in particular, which we believe will
continue to be an area of focus as clients are pressed to show active
management of their compliance obligations,” says Costello. “ Furthermore, fees
are lower, the asset base squeezed and revenues are tight, so it’s clear the
buy-side firms must be prepared for unprecedented rates of change in order to
One way that asset managers can minimise expenditure,
she says, is to consider outsourcing aspects of their technology
infrastructure, helping them to avoid expensive maintenance costs. The number
of clients opting for outsourced solutions is growing, notes Costello, a theme
she expects to continue in the coming years.