As the UK capital market seeks to modernise, collaboration between the buy- and sell-side as they adopt the relevant trading technology is paramount, according to a recent report by the IA.
Galina Dimitrova
Specifically, the trade body is calling for cooperation on the automation of IPOs and block trades as the market seeks increasingly efficient and competitive processes through modernised infrastructure.
The IA paper includes a call to action for both sides for a projected smooth and successful transition to automation.
Galina Dimitrova, director, investment and capital markets at the IA, explained: “[…] IPO and secondary market placements remain one of the few areas in modern capital markets that are still reliant on manual processing to communicate demand. It’s high time that this process is modernised. We are therefore calling for buy- and sell-side collaboration to embrace technological advancements and automate the IPO process.
“Streamlining the process with electric orders would enhance efficiency, reduce risk and provide greater transparency for end investors.”
When it came to solutions, the IA pointed to both the buy- and sell-side moving away from in-house building of systems and more subscribing to service vendors that provide electronic new deals allocation platforms.
The paper also highlighted the relevance of a unified approach, pinpointing the FIX Trading Community protocol specifically when it came to automation – providing a standardised communication system.
Read more: Fireside Friday with… FIX Trading Community’s Jim Kaye
Jim Kaye, Executive Director at the FIX Trading Community, added: “This is an area that is ripe for electronification – we welcome this initiative and stand ready to leverage the expertise of our member base.
“Our history of designing standards to automate trading shows what’s possible and we believe automation of the IPO process is achievable when you have the right people behind it.”