Waters USA 2010 was held on December 6, 2010 at Marriot Marquis Hotel at Times Square. I was not sure what to expect as this was my first time attending this show. I must say that it was very well attended; my guess is that over 500 people attended the event. There were representatives from quite a few of the major Wall Street firms: JP Morgan Chase, Credit Suisse, Royal Bank of Scotland, Morgan Stanley, Deutsche Bank and Bank of America were on hand to discuss the most interesting topics in financial services today. An especially hot topic was High Frequency Trading (HFT).
The keynote was presented by Andrew Silverman from Morgan Stanley. He presented quite a few interesting facts; for example, S&P volatility compared to price in 2008/2009 was > 6%, this was the highest that we have seen; Average trade size is lower than it has been historically, however the trade volume is 7 times more than 2004. The average volume of trades in US markets is around 12 billion shares; in2010 it was about 8 billion - that is quite a drop! Is that a trend or just a blip? One other interesting thing that was mentioned was that it is ”guestimated” that 50-70% of volume is from High Frequency Trading.
There were quite a few panel discussions on topics including how firms were trying to drive by increasing the utilization of their existing assets/infrastructure to deliver services in cost effective way, as well as some discussing regulations on HFT, risk management and controls, while continuing to be innovative and drive revenue growth.
Public sentiment as well as regulatory bodies felt the FS Industry have not done enough to self regulate as Issues like the “flash crash” and order leakage (IOIs) will likely force government regulators to impose regulations now. Nobody knows exactly what the future regulation looks like at this point, but they know they are coming.
The main takeaways for me:
1. Firms need to try and gain additional advantages from existing infrastructure to support the growth of the business. This could include the use of grid software, private clouds and hybrid clouds (private/public clouds) which can be provided by vendors like Platform Computing.
2. Additional regulations, whatever shape or form they come in, will require IT infrastructure to be adaptive and flexible in terms of providing more computing power when it is needed to deal with the multitudes of computations and reporting requirements to comply with these regulations. This means that with more risk management controls and reporting transparency it will put more pressure on infrastructure and that means you will either need to build more or find ways to get more out of the existing servers.
In both cases, partnering with Platform Computing to continue to grow the business, meet new regulatory requirements and still meet business service levels is the key to firms being successful in the future, whatever it may hold.
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