Ines de Tremiolles
In the opening session of the Fixed Income Leaders Summit 2022 (FILS) in Nice this week, buy-side keynote interviewees identified key themes including technology, connectivity, liquidity and diversity as the defining elements of the year for the fixed income market.
In the conversation featuring Inés de Trémiolles, global head of trading at BNP Paribas Asset Management and Yannig Loyer, global head of trading, securities financing and derivatives at AXA Investment Managers, a key point was that these themes are all interconnected, and cannot be viewed independently but must be curated in combination.
“To get data you need connectivity,” explained de Trémiolles. “Today, thanks to connectivity, with all the different platforms and systems we have, we can go a lot faster, capture better bid offer spreads. While doing that, we create data, and when we have data we can analyse it and learn more.
“We talk about machine learning but first we need to talk about human learning – what lessons we can learn to improve our trading going forward. So connectivity is also about human relationships.”
“We talk about machine learning but first we need to talk about human learning – what lessons we can learn to improve our trading going forward.”
Loyer also stressed the importance of tailoring solutions to buy-side requirements. “We need technology that adapts to the environment we’re in and responds to the challenges we have. There are many solutions out there, but there are also still some black holes, with very manual processes – like onboarding, where technology is still lagging. Every step in the onboarding is still manual, pretty much, from KYC onwards.”
Regulation was unsurprisingly another focus point, with consolidated tape, transparency, clearing reciprocity post-Brexit and corporate social responsibility rules (CSR) identified as important themes. Loyer emphasised that: “We need to look at what’s happening in the future as well as keeping up with what’s happened in the past,” and de Trémiolles agreed. “By the time to rules come out you already need to be ready to put them in practice, so you need to be looking ahead all the time.”
She also reminded the room that “regulation for the buy-side is central but we also need to keep track of regulation for the sell-side, as that can also have an impact on prices. It’s difficult to decide what to focus on, because there’s so much out there all the time. The important thing is to sit down and understand the key risks you need to mitigate, then implement that across the whole team, bringing all internal stakeholders on board.”
According to an audience poll, having the right data is the most important factor for an FI trading desk to get right on the buy-side this year (43%), while technology connectivity came second (22%) and employing the right traders who understand the fixed income market came third.
“Liquidity, diversity and motivating the younger generations” was also highlighted as crucial in developing the desk going forward.