By Anya Aratovskaya

Key takeaways from TradeTechFX Miami 2023

February 2023 in Partner Content, Recent Events

Photographs by Richard Hadley

The conference had a total of around 600 attendees (attendees list can be found on their website) with the majority coming from New York, followed by London, Boston and Toronto. Most attendees held senior or VP positions, and only 29.4% had “Sales” or “Business Development” in their job titles. I would say at least half of the exhibitors were technology companies – established names and reputable corporations.

Size-wise, the conference was much smaller compared to any other I’ve attended in the last year. For example, IFX Dubai 2023 by Finance Magnates had around 3200 attendees. Of course, these two conferences can’t be compared as they represent different market segments/industries. Nonetheless, there were a few companies that participated in both expos. Overall, the conference was well-organized, and I enjoyed the panels I attended.

What was discussed?

What was discussed? Or to be precise, what I was hearing about the most:

1. Data.

Everyone wants data, but very few know what to do with it.

There is clearly not enough data for spot FX compared to all other asset classes. During the Liquidity Provider Panel, all speakers acknowledged that Liquidity Providers are changing the way they look at data. Jay Patel has mentioned that many LPs are evaluating their datasets to make sure clients can consume it.

There is an absolute demand for ways to measure market impact as an example.

Relationships with LPs are important as never before, and transparency on both sides will be crucial in maintaining these relationships.

2. Global Code.

During the conference, there was a dedicated panel focused solely on the Global Code. However, the Global Code was also frequently mentioned in other contexts. It is a unique and highly representative document that aims to increase transparency and promote industry resilience. According to Gerardo Israel García López this is the industry’s best effort to achieve these goals. The panelists agreed that the Code was designed to enhance market functionality and set clear expectations.

Although self-certification of compliance with the Code is necessary, it is not sufficient. Consumers should demand actual evidence of compliance, in addition to statistical data, to promote transparency.

The GFXC commission is currently monitoring several future trends:
a) Data access and availability
b) Transparency about the usage of trading data on trading venues

Panelists concurred that the buy-side should increase their involvement in GFXC initiatives.

3. Liquidity.

Liquidity Mix Interview, EM Liquidity, and Liquidity Provider Panels brough up similar questions on How buy-side clients can access efficient and reliable liquidity as well as improve it?

The short answer is workflow automation, rapid solutions engineering, data analysis, and good relationships with LP.

The long answer is: To improve liquidity, the liquidity consumer must first evaluate itself. Only after doing so one can understand what is happening to their flow.

Opinions on how many liquidity providers a firm should have been divided, from 4 LPs as an unspoken rule to 10-15 as a good mix to Infinity.

I personally support the idea (shared by one of panelists) that data should drive any conclusions on a case-by-case basis:

a) Data/analysis should identify the % of the time that the Liquidity Provider (LP) improves the spread.
b) % Of time that the LP improves the market.

Nick Bonamo, during the Liquidity Mix Interview Session, has mentioned that consumers should focus on using data to find liquidity “pockets” and timeframes when any given Liquidity provider is outperforming others. No one expects one LP to be the best in every trading scenario.

4. Technology.

It is all about technology.

Technology is crucial in the financial markets, but the prevalence of old legacy systems (that “push updates without core upgrades”) creates challenges for some buy-side attendees. It’s not always feasible or practical to switch from legacy systems to brand-new ones. Technology in the finance space is incredibly sticky, and changing providers can be a complicated and risky process. No wonder that the average sales cycle for the technology firms is 9-11 months now (if not more for some).

Of course, there were various discussions about the emergence of AI in the finance industry, which has become a new buzzword. The possibility of developing new AI-based automated solutions for risk management in the highly fragmented FX market was also explored. Additionally, there were chats about the declining interest in cryptocurrencies, which despite experiencing a rough year, has still managed to secure its place as an alternative investment class.

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