Over two years on from the introduction of MiFID II* and all market participants are still searching for ways to meet their obligations as efficiently and effectively as possible. It has impacted the workflow across the trade lifecycle – from sourcing pricing data to help meet best execution requirements to increasing operational transparency on trade execution.

These complexities have only been heightened in the post Coronavirus era. Where physical co-location has been a feature of trading processes for decades, sales and trading teams who once were within arm’s reach are now globally distributed. In a highly fluid environment with potential for repeat disruptions and ongoing remote working, business and process models must utilise the latest digital infrastructure to maintain operational connectivity and flexibility.

Throw the shift towards passive investment and continued cost pressures into the mix and the question is no longer should I digitalise my trade workflow, but how best to do so? For us it’s not a binary choice between letting the robots take over or staying with tradition. The coronavirus crisis has also proven the market is still reliant on trusted relationships in the search for liquidity. Human interaction needs to be preserved, but made compliant.

So for us, the question is more how you can seamlessly combine human led-processes and technologies for increased control, efficiency and transparency. NatWest Markets wants to leverage digital technologies to preserve our high touch client interaction, but with greater efficiency for both parties. 

* Markets In Financial Instruments Directive (MiFID)

Let’s take a look at some ways you can utilise digital innovation across the trade life-cycle.

In a relatively short period of time, the industry has achieved through mandated regulation the previously thought impossible – electronically recording all voice price queries.  New desktop tools deployed to digitise these voice workflows not only help with regulatory compliance, they can also help you capture and therefore analyse flow in a similar way to what is possible via electronic venues.  Where client service for example hit rates or quoting performance could be measured effectively on eTrading venues, the same is now true for voice executions.

A number of technologies have also launched to optimize workflows, aiming to introduce shared request-for-quote platforms with minimal dual entry. Symphony, OpenFin, Finsemble, FDC3* and ipushpull, to name a few, can be leveraged to help buy-side investors and dealers build workflow to assist with regulatory controls without compromising on service or efficiency. We have partnerships with several of these providers to ensure clients have the full pricing data visibility they need as quickly and easily as possible in a way that can be integrated with our clients’ desktop tools.

An example here, where NatWest Markets have partnered with iPushPull, the previously manual process of copy and pasting axes into a chat room has been replaced by a model where axes can be pushed or even streamed real-time to clients via excel plug-ins, a symphony chat or any one of a number of other endpoints at low effort. The salesperson task in this workflow is to understand the client need and make axes relevant, the mundane and inefficient task of manually keeping the axes up to date in a chat context is removed. Aside from the inefficiency removed from the process, ultimately, the client benefits from better client service and more real time availability of data.

*Financial Desktop Connectivity and Collaboration Consortium

Every second counts in volatile markets and the use of chat-bot tools ensures buy-side investors can go from quote to trade in the shortest time possible. Annually, NatWest Markets receives over 50,000 level requests from our clients on a voice basis. During stressed market conditions, exacerbated by physical separation during the coronavirus crisis, the ability for sales and the client to leverage digital tools can help ensure pricing data is available instantly. An example here is the work done with Symphony and Adaptive Financial Consulting to build a voice request-for-quote (RFQ) assistant bot called SCOUT. Level requests can now be made and responded to instantly.

Leading into an execution workflow is then also more efficient, where SCOUT helps structure the communication to enable workflow efficiency and reduction of dual entry on both sides.

Capturing data on how trades have performed is one massive requirement, but how to effectively store and process it is an even bigger challenge for your average buy-side trading desk.

Where electronic trading venues support client’s analysis of broker performance, voice has always been a blackspot. Digitising workflow can enable the availability and storage of data in the same format as electronic trades which then enables better analysis and use in control processes. 

In an environment where execution timestamps should be consistent within one second between dealer and client, digitising workflow to enable timely accurate data capture is the only viable option. SCOUT once again is an example of how by structuring the voice RFQ and making it available in the non-proprietary FDC3 format, the client and NatWest Markets has exactly the same data available to them.

A new way of working has emerged: combining the benefits of personal interaction with the speed, efficiency and regulatory controls provided by digital processes. Through using this hybrid model investors can get high-touch services whilst removing process inefficiencies that have been exacerbated in recent years and months.

What’s more, the value in the hybrid trading model goes beyond operational gains – it releases human-time for more complex decision-making and useful dialogue.

• It’s about getting the best of both worlds – human intuition and dialogue combined with the speed, transparency and data processing power of machine-enabled technologies.
• Clients that adapt will be able to control migration to electronic channels rather than just act as passengers. Optimising use of high touch and fully electronic channels is key as market structure continues to evolve.
• It’s not one size fits all - human interaction can be preserved across the whole trade lifecycle or key stages, whilst leveraging automation.