The growth in exchange-traded funds (ETFs) and MiFID II requirements are driving demand for electronic and programme trading services at Fidessa.
A market review published via the firm’s annual results outlined regulatory and structural changes caused by large inflows of ETFs and other complex instruments.
The technology vendor said top-tier institutions are seeking more sophisticated trading platforms, support for correlated assets and electronic execution from service providers to deal with the changes.
Specifically there is a need for large scale programme trading services that can automate ETF basket-style trading for a variety of assets in a systematic fashion.
“Fidessa is seeing evidence that many of the top-tier firms believe themselves to be in need of assistance in these areas as a new arms race develops,” the review explained.
It added the growth of ETFs currently represents just one aspect of an increase in the use of various equity correlated products including swaps, convertibles, corporate bonds and options.
“As these products grow, large customers, who have historically been equipped for manual trading, are needing to re-think their infrastructure as the need for automation becomes more pressing,” Fidessa said.
“These firms are evaluating their market position and looking for partners that can assist them to quickly and cost effectively re-position in the most strategic areas of their business.”
Additionally, MiFID II’s emphasis on execution quality, reporting requirements and the subsequent cost restraints around compliance are also driving demand for programme and electronic trading services.
Fidessa said that it expects the demand for electronic trading services to result in significant new contracts during 2018.
Overall, annual revenues at Fidessa increased 7% in 2017 to £354 million, compared to £332 million the previous year.
Commenting on the performance, chief executive Chris Aspinwall predicted that technology will play an even greater role in financial markets as the impact of new regulation takes effect.
He added: “It is also clear that increasing numbers of firms are going to need assistance in building out the platforms of the future and Fidessa is already seeing evidence of this within its pipeline.”