Finding Flow: The Case for Electronification in OTC Markets, Its Evolution and Its Future in Illiquid Markets
The financial services industry has been in a state of rapid flux ever since the first of a series of critical reforms were implemented, namely Dodd-Frank, in 2010, as well as because of the onset of disruptive technologies and new set of competitors emerging from the fintech industry.
The last decade has seen a significant uptick in electronic trading across a broad range of asset classes. This growth coincides primarily with the onset of three dynamics: the quest for increasingly elusive profitability; technology advancements; and snowballing regulations that hurled tougher standards on transparency, execution and reporting.
However, there are other factors that are also influencing the move to electronic trading, such as the increasing need for banks to service clients with speed and accuracy, and to keep pace with clients’ increasing demands for bespoke solutions, which overwhelmingly includes trading in over-the-counter (OTC) derivatives. In fact, the anticipated “electronification” growth rate of the global OTC derivatives market over the next few years is exponential. This may be considered quite remarkable given there was a time when most traders would have thought the electronic trading of OTC derivatives would be impossible. And the move to electronic trading of OTC derivatives has taken hold faster than most might have guessed. Banks of all sizes are beginning to make the move, with one clear incentive being the real potential to capture a dramatic increase in trading volumes and revenues.
In this white paper, Robert Gray, Sales Manager for Numerix’s EMEA region, discusses the confluence of factors that have significantly influenced trading electronification. By downloading the paper, you can gain extraordinary facts and perspectives on:
• The forces behind the launch of electronic trading platforms
• The evolution of the electronic trading of derivatives and the opportunities that are turning it into a trend—such as creating a true flow business
• The benefits and growing adoption of electronic RFQ platforms
• The benefits of partnering with fintech to gain best-execution capabilities to support the growing client demand for trading in illiquid markets
Authors
Robert Gray
Robert Gray is an OTC derivatives market expert at Numerix and a long-time industry veteran in the space. His career began in LIFFE, trading for ten years in futures and options for Lehman, SGF (now ICAP) and Tullett, in addition to a brief stint on the IPE trading Brent Crude Oil. Following the end of pit trading, Mr. Gray began a sales career with roles at Standard and Poor’s, SuperDerivatives, Saxo Bank and CMC Markets across EMEA.
Prior to joining Numerix, Mr. Gray spearheaded an OTC derivatives pricing and RFQ solution for a traditionally back office-focused software company. He is currently a sales manager for Numerix’s EMEA territory.
