On Thursday 15th May, the FIX Trading Community hosted its annual Nordics Trading Briefing at the Berns Hotel, Stockholm. Close to 230 delegates attended this year’s event as it once again proved to be as popular as before with an agenda aimed at encouraging lively debate. Unlike the Americas Conference in February, the weather was extremely kind as the sun shone all day and, what seemed like, all night as well. At this time of year and with the kind of weather the event had, Stockholm really does come alive after a long hibernation during the cold winter months.
The day kicked off with a focus on ‘Where is the market now and what is next for the Nordics?’ Generally, the sentiment was quietly positive. Q1 2014 has seen an uptick in volume across the region, perhaps not as dramatically as parts of Southern Europe, but still double digit percentage increases vs Q1 2013. The region didn’t suffer the boom-bust cyclical trends of some other regions, and as a result, the pick-up in activity has been more measured. There was certainly no air of complacency on this panel or any other panel. Participants recognised that there is more regulation to come and one panellist quoted a recent poll suggesting that 45% of businesses are suffering ‘high stress’ due to regulatory change. Another panellist suggested that innovation is being stifled by regulation. One could argue that the opposite may in fact be true. Over the years, the market has become more and more regulated and IT spending has had to increase to keep pace and keep companies at the forefront of this change. The worry is what will the next round of regulation entail?
The subject of financial technology is a popular one in the region. There is a strong history of engineering in the Nordics, particularly in Sweden. Over the last 20 years, this has manifested itself in the financial technology sector and that heritage has continued. However, there were some slightly concerned voices about retaining that independence. Recent M&A activity involving Swedish companies has indicated that the world is looking at the region with acquisitive eyes. However, the globalisation of the technology arena is also proving to be an advantage for the Nordics. Technology designed and engineered in the Nordics is now being used all over the globe to power trading platforms. ‘Better engineers than business people’ was how one C-level executive described the region’s technology companies. Another commented on the relative size of the organisations compared to their global peers. There is most certainly continued innovation, but there are worries.
An area of the market of particular focus for the FIX Trading Community at present is the fixed income sector – both bonds and derivatives. It was very interesting to hear the thoughts of market participants on this issue. Post financial crisis, the region’s debt markets have worked relatively efficiently, perhaps due to the relative size and number of market makers. However, as referred to in previous sessions, further regulation is imminent which will likely lead to a transformation of the current infrastructure. This did not seem to be universally welcomed, but change is afoot. The process will be both staged and collaborative, but the comment of a panellist that ‘it would be a dream to trade electronically’ indicates that the reality may take some time.
Similarly, a change in the way the buy-side works in the Nordics seems to be coming. CSAs, which have been prevalent in other parts of EMEA, seem to be gathering some momentum. One survey indicated that under 30% of the current buy-side in the region use CSAs and, out of those who do not, over 50% say they will investigate the possibility during the year. The move towards unbundling is also gathering pace. As has been seen in other regions, the role of the buy-side trader is now changing with more focus on compliance and a concern from traders and heads of trading in particular that there is potential for personal liability in that role.
The final session for the day addressed a very topical item regarding news and the availability of it to the trading community, with a particular focus on machine-readable news. Given the make-up of the panel, there was never going to be complete agreement but it was interesting to hear the different viewpoints and get an understanding of how the different participants use the news. There will be more debate to come on this topic.
The day ended with some networking drinks and a chance for people to catch up with ex-colleagues and speak to clients and their peers. As with any region, the commitment that is shown to the organisation is reciprocated. The FIX Trading Community has had an active membership base in the region for a number of years now and they have done a huge amount of work to keep the Nordics at the forefront and to make the annual Trading Briefing happen. These events are for the industry and organised by the industry. We look forward to being back in Stockholm a year from now.
By Tim Healy, Global Marketing and Communications Manager for the FIX Trading Community.