Paul Humphrey, chief executive, BMLL
he sophistication of market participants across the board is increasing and as a result, the data arms race will continue. It is abundantly clear that data quality is non-negotiable in understanding liquidity dynamics and market microstructure.
Traditionally, only quant trading firms were at the forefront of the data race, but this is changing. Non-quant firms are looking to use alternative methods to improve trading outcomes, monitor risk and performance, improve alpha generation and broker selection, and gain a competitive advantage.
With the data quality race continuing at pace, we are seeing more and more firms, especially large buy-sides, separate the two disciplines with dedicated teams for both real-time and historical data. They are allocating more resources to building workflows and applications on top of a strong historical market data foundation.
Firstly, this trend is a clear indication that the buyside historical data needs are not met by their current real-time data suppliers. By design, the incumbent suppliers of historical data are real-time providers and therefore can only deliver inferior data, which is merely the exhaust capture of their real-time feeds and it has been this way for decades.
Secondly, this development places historical data quality on par with real-time data quality, leading to a re-evaluation of existing data vendor capabilities. This underscores the mission-critical importance of historical data in empowering the buyside community to focus on their core business, generating insights to achieve better trading outcomes. In an increasingly quantitative and algorithmically driven market, best-in-class quality data is required.
Gareth Coltman, global head of trading automation at MarketAxess
Automation has transformed bond market trading in 2024, with the majority of trades from our largest clients now automated for the first time. We expect this to continue into 2025 as its adoption spreads, driven by advancements in technology and shifting market dynamics. Automation volumes on MarketAxess recorded steady growth of 28% in Q3, with market penetration more pronounced in US high grade and European credit markets. Emerging markets, which have been slower to embrace automation, are now beginning to close the gap.
Supporting our dealer client base in their own automation journey is a priority for us. Sell-side traders have begun to leverage a combination of Open Trading and automation to maximise balance sheet velocity and support portfolio style execution. We are starting to see more clients looking to automate workflows beyond simple request for quote (RFQ), and we expect this trend to continue into the new year. We’ve seen rising interest in sophisticated automated trading workflows that can adapt to changing market conditions and needs of its users—like our own Adaptive Auto-X solution.
With many political and economic uncertainties looming in 2025, market conditions will play a big role when it comes to client appetite for automation. Dramatic levels of volatility and price dislocation tend to see to traders adopt a more hands-on, conservative approach. However, in today’s competitive and cost-sensitive capital markets efficiency is paramount, and automation typically returns quickly as markets stabilise. The trend is clear: the shift to automation is wholesale and ultimately will only become more prevalent in fixed income trading in 2025.
Matt Barrett, CEO and co-founder, Adaptive
Trading technology is at a tipping point. The convergence of performant and resilient cloud technology, tech accelerators and open-source technology are changing how capital markets firms think about trading technology. The proprietary systems that once gave large banks and hedge funds a competitive edge are no longer exclusive to those with deep pockets. Firms of all sizes are now able build their own trading systems from the ground up rather than relying on off-the-peg technology.
The increasing accessibility of proprietary trading technology driven by the above-mentioned technologies is lowering barriers to entry, increasing competition among firms across the financial ecosystem and ultimately acting as an engine for innovation. In 2025, an increasing number of firms will reassess their technology estates to ready themselves for the adoption of new technologies – from the proliferation of AI to 24/7 trading or increasingly streamlined multi-asset platforms.
The adoption of purpose-built technology that harnesses increasingly powerful cloud technology will enable firms to do more with less – creating lower latency, higher throughput and more resilient trading systems. This is not just an opportunity for individual firms, but the market as a whole.
Gavin Williamson, chief executive officer, The Broker Club
Digital adoption across many aspects of a trade life cycle will either enhance existing deployments or start to be adopted with AI, blockchain and cloud technologies leading the way. For trading and portfolio management, AI will be deployed, providing real-time analysis and algorithmic enhancements as part of the decision-making process. Operational efficiencies can be achieved by making use of blockchain technology, and TradFi can gain valuable insights from the digital assets sector.
The approach of T+1 will provide challenges and opportunities to add to the considerations of our members, however, keeping them awake at night is cyber security and the dire consequences an attack could bring to their businesses. At our digital forums, we discussed what may happen post-US election and concluded that Trump’s natural instinct is to deregulate, while also noting his support for crypto. This gives the UK a window of opportunity to finalise the regulatory environment, possibly in a less stringent manner than MiCA, and get ahead of the game.
Pam Samrai, head of post-trade product for buy-side OMS, Bloomberg
Buy-side firms will continue to experience cost pressures as operating costs outpace revenue growth. Recent regulatory action leaves the industry with no option but to accelerate their investment in data and technology as regulators and investors drive a focus on data accuracy and governance, operational resiliency and automation to manage regulatory changes, such as settlement compression.
To combat rising costs, management teams will opt to review their operating models and technology partners with a view to consolidating vendors and outsourcing non-core functions. The shift towards outsourcing will continue as trust in outsourced providers improves with buy-side firms increasingly prioritising those technology partners that can provide a front-to-back solution to replace disjointed legacy systems.
Additionally, there will be continued investment in disruptive technologies that could facilitate the move toward atomic settlement to reduce counterparty and settlement risk, optimise capital, and enable intraday margin cycles.
David Mercer, chief executive officer, LMAX Group
Capital markets are on the cusp of transformative change, propelled by advanced technologies like blockchain. Despite hurdles, including some industry resistance to change, integration with legacy systems, regulatory uncertainty and a lack of market standardisation, the adoption of decentralised systems and digitisation is inevitable. Looking ahead, these technologies can deliver frictionless trading and unlock greater market access.
Institutions that once relied on traditional market infrastructure will increasingly adopt solutions where every transaction, whether a micro-payment or a large-scale trade, can occur seamlessly on-chain. This evolution underscores the importance of avoiding obsolescence—the plumbing powering today’s capital markets may no longer be relevant tomorrow. The challenge, however, lies in overcoming inertia. Traditional players can only remain relevant by meeting the demands of this new world. No company is safe, and only those who are willing to take calculated risks, be first to market and abandon old principles to stake out new territories will stay standing amid the next wave of capital market innovation and transformation.
Blockchain is the enabler for the globally interconnected financial system that is truly inclusive and has the power to reach everyone with access to a smartphone. This democratisation of capital markets could unlock a potential market of six billion accounts. That’s the potential scale of the market we need to be solving for.