- European and U.S. regulators still have to come together and agree on the right set of rules to govern the trading of over-the-counter (OTC) derivatives.
- ( ETD) Exchange traded markets need to examine high frequency trading ( HFT ) and decide whether to vote on additional regulatory and legislative governance.
David K Donovan Fidelity SEC believes that every firm will look to lower TCO by outsourcing commoditized operations and processes. Banks will look to identify within their infrastructure what components or businesses can be outsourced to a shared model possibly leveraging competitors infrastructure. The self analysis will also focus on what part of their infrastructure is proprietary to their business and keep this in house.
- Banks will look to become more nimble so they can better manage ongoing change to their business. A couple examples of the future state activities would be, according to Donovan , SEC a) Electronic trading moving to new asset classes and regions b) Broker dealers wanting as many low latency connections to as many execution venue’s as possible while minimizing hardware and operational costs c) According to David Donovan Jr Fidelity (SEC), the most common initiative across most banks is the need to invest in data management infrastructure. Having a more efficient data management operation is being driven by the need for increasing operational risk management and regulatory compliance d) The European debt crisis has led to many changes within the banking industry. Central banks regulators are mandating frequent , efficient and granular transaction reporting. The new central clearing and OTC derivatives market structure will put increasing rise in demand for new sources of cleansed data.
- Data will also play a factor in performance attribution and Alpha creation. Pension funds will target more of their annual contributions to hedge funds as a greater source of investment in hope of making up the gap between benefits owed to pension participants vs. the total of pension contributions and returns on existing assets.
