In this week's Future Focus we speak with Abdullah Hiyatt, CEO and Co-Founder of THETA Trading Technologies, about the changing requirements of the buy-side, the inflexibility of incumbent vendors' solutions, and the need for a modular and flexible technology infrastructure to increase efficiency, flexibility and transparency.

OTC – What are the key technology issues faced by the buy-side?

AH – The buy-side is faced with heightened levels of complexity across investments, operations and regulations, including increasing margin pressures, and shortcomings in respect of automation and legacy systems. This is compounded by operational inefficiency and a lack of STP, combined with the ever-present threat of security and data breaches.

Firms are increasingly consolidating their trading activities and creating multi-asset trading desks, but technology solutions are falling short. There is a lack of viable options when it comes to integrating in-house technology with multiple vendor platforms and inflexible UIs (user interfaces) in use today.

Existing O/EMS platforms focus largely on cash products, with little effective support for derivatives, and certainly not structured products or complex instruments. Legacy technology stacks are showing their age, are difficult to access, and expensive to implement, maintain or upgrade. These systems are unsuitable for a modern, digitalised business world where smart devices such as phones and tablets are ubiquitous.

OTC – What solutions are needed?

AH – The market is building on the lessons learned in the first two waves of electronification – initially for listed products in the exchange world and then for OTC, specifically FX, on the sell-side.

The third wave centres on electronification for all instruments, be they cash, derivatives, listed or OTC. This third wave sees a reengineering of the established electronic trading model to deliver the enhanced digital-era connectivity and transparency.

The right smart tools need to be made available to buy-side clients looking to trade. The market needs a truly multi-asset trading capability accessible through a digital framework and via a fully extensible API.

Agile delivery is a cornerstone of this new model. Software as a service (SaaS) offers an exponential increase in terms of time to market. Projects involving the deployment of "off-the-shelf" technology that formerly took months (or even years) can now be completed in as little as a few hours. Also, a subscription model lends itself to flexible pricing to accommodate a firm's changing needs, while also ensuring ongoing reinvestment in the underlying technology.

OTC – What is THETA doing?

AH – We have created Apollo, a purpose-built multi-asset O/EMS trading infrastructure, which supports FX, Fixed Income and Equity trading. We provide the buy-side with flexible tools to access direct execution channels, aggregators, and venues, combining this with trading and risk controls, and post-trade services.

Flexibility is the key to our infrastructure, as we recognise that not all clients want every supported component. We use a SaaS model, meaning that modular services can easily be tailored to meet a client's specific needs. Modules are deployed quickly, and future upgrades are simple and cost-effective. We support rapid deployment, globally via a HTML-5 browser that requires no code, install or plug-in. Clients can also access the platform via an open API and integrate fully with existing their front-to-back ecosystem via FIX.

Apollo is launching in Summer 2020 with a Fixed Income and Equities O/EMS, then we are adding FX. All of these assets should be live for the buy-side by the middle of next year.

OTC – How does this benefit the buy-side?

AH – Enhancing connectivity, efficiency, flexibility and transparency across all products, whether they are cash securities or derivatives, listed or OTC, this new model for electronic trading provides firms with the flexibility and tools needed to thrive as market structure and the trading landscapes continue to evolve. Ultimately our multi-asset trading architecture redefines efficiency, flexibility and transparency for the buy-side.