Markets Media caught up with Chris Jenkins, Managing Director at TORA, to discuss markets’ extreme recent volatility and what it has revealed about trading technology.
Chris Jenkins, TORA
What has the recent market volume and volatility revealed about the state of trading technology industry-wide?
The recent crisis and volatility sheds light on the state of trading technology. Over the past decade, we have seen increased investment in technological infrastructure with new and more powerful systems being implemented industry-wide. The stress of recent instability will reveal which businesses have been serious about business continuity planning – they will find themselves better placed to deal with volatility, volume and closed offices and the challenges that this will present.
Does it appear that the money spent on new technology in recent years was worth it?
We are seeing a true test of the billions spent on infrastructure upgrades for the past decade. Those who put plans in place, stress-tested systems and run simulations should fare better. It is not always an issue of who has spent the most, the type of preparation that matters is both monetary and temporal.
As more market participants work from home, what are the technological ramifications?
The most important question is whether a company has moved to a fully cloud-based system. Since the cloud is location agnostic and decentralised, employees can connect from their own homes with only a computer and a reasonably fast broadband connection. Firms that rely on virtual private networks or remote applications to access onsite server based applications are adding potential latency into functions that could be crucial for traders.
Will there be a divergence across firms in terms of operating efficiency?
It is very likely that firms that have not fully prepared, or those that rely on outdated systems, will see a lapse in performance and returns over the coming few weeks. Again, I anticipate that firms with cloud-based or even modular systems in the cloud will see less interruption of performance and service during this period.
What lesson(s) should firms take away for next time?
Preparation is key. I cannot stress this enough. Dry runs and drills in ‘calm’ times are essential. Have a plan before it is needed. When stability returns, take stock of what worked and what didn’t in this crisis.
