Driving Returns in Stressed Markets: Insights From Barclays, BMO Capital Markets and More

TradeTech 2023 in Paris is bringing together some of the most brilliant voices from across the European market to discuss how to succeed in a volatile market. In a standout interactive panel this morning focussing on market structure, our speaker line up shared expert views on how the buy side and sell side can boost returns in already stressed markets.

The changing liquidity landscape is currently a hot topic of discussion on everyone’s mind. However, this panel has revealed that if you remove challenges related to COVID-19 and the War on Ukraine, the industry is not far from where it was in 2017.

What is being challenged currently is the make-up of the system. There is simply not enough on the market. From the point of view of the buy side, it comes back to deepening your relationships and talking about future developments. It is crucial to have an understanding of the range of tools used to navigate liquidity and how to best engage with new technology providers. By doing so, an added layer of sophistication can be added to the buy side to keep up with ever changing market structures.

Our speakers candidly revealed that liquidity has been a trend since the financial crisis. As a result, there has been an evolution of the communication between the sell side and their clients. How often heads of trading communicate with their clients can depend on a wide range of factors such as organisation size. However, the level of transparency when doing so is becoming more crucial now than it has ever before.

To reap the benefits of increased transparency, organisations are looking to develop the quality of market data and their ability to deliver these insights in real-time. This is a huge opportunity for brokers to refine the data-sets that is coming in and their own process capabilities. Traders want trust. Developing data further is giving organisations the tools to strengthen that trust and build a more stable market.

To round up this panel, an interesting discussion took place about improving the quality of collaboration between the buy side and sell side. The partnership stems from transparency but with the added growth of electronic trading, this relationship will continue developing.

There are so many growing opportunities to react to liquidity and these are far from static. As the market continues to develop and expand, the trend of equities is crucial. The question traders should be asking is if they are at the beginning of their journey or at the end of it. Our speakers revealed there might still be a long journey ahead.

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