24/04/2023 As the market becomes faster moving and digital disruption
accelerates in almost every sector of the economy, it comes as no surprise that robust
technology stacks are playing a significant role in improving the offering of liquidity
brokers such as Finalto. In the liquidity pricing space, there is a wide selection of
advanced technologies and a broader range of products available than ever before. Antony
Parsons, Head of Liquidity at Finalto explains, “as client technology becomes
more advanced, the need for robust and reliable technology infrastructures is more important
than ever when it comes to providing consistent pricing.” Firms using third-party
pricing technology providers, may not have access to the most up-to-date and reliable
pricing information or technology, which can result in delayed pricing for investors. This
latency can cause investors to miss out on trading opportunities or make suboptimal
investment decisions. As a result, clients have an increasing need for customised liquidity
technology that fulfils their requirements while still having access to secure, reliable,
and reputable pricing. Therefore, it makes sense that liquidity brokers with strong
technology and data infrastructures stand above the rest. The advantage of having in-house
technology systems is twofold. “On one hand,” explains Parsons, “sophisticated
technology and data analytics provide us with the means to interpret trends and
inconsistencies at a rate that would not have been possible in the past.” Equally, he
says, “bespoke liquidity technology solutions provide a versatility to make fast and
efficient changes that firms relying on third-party liquidity pricing technology firms can’t
compete with.” For some firms, adapting and developing their technology in a meaningful
way could take as long as a six-week sprint to turn around, whereas in-house bespoke
technology can adapt at a much faster rate. At Finalto, we focus on providing bespoke and
resilient technology that produces consistent and reliable pricing. One of the main
advantages of bespoke liquidity pricing solutions, stressed Parsons, is “the
ability to make fast and versatile alterations to the system to protect our clients when it
comes to pricing.” Technology enables liquidity providers to react to changing market
conditions as quickly as possible. Parsons went on to say that “having
the facilities to give a bespoke offering to clients for their liquidity pricing needs is a
massive advantage, particularly when dealing with increasing volumes of data.” In order
to maintain competitive pricing, robust technology stacks play a critical role in analysing
substantial amounts of client flow data as challenging flow can cause latency and even
system downtime. Parsons stated that, “at Finalto we are consistently
striving to make our systems as sturdy, efficient, and customisable as possible for the
benefit of our clients.” This is the crux of the importance of data and technology in
liquidity pricing. Parsons went as far as to state that, “the strength
of the technology stack and ability to analyse data is just as important as the pricing
itself”. If your system has issues it can cascade into latency and crashes that can be
massively detrimental to the clients relying on the system. Especially with increasing
market volatility and liquidity flow volume, if you are unable to contend with heavy order
flow it can have catastrophic implications for the reputability of your service. In
conclusion, the importance of technology and data in liquidity pricing is paramount and
strong technology will be an expectation from your clients. With innovative technologies
emerging every day and market volatility on the rise, firms need to ensure they have robust
and reliable systems in place. In-house bespoke technology solutions offer firms the ability
to adapt quickly to changing market conditions, which can be a significant competitive
advantage. At the same time, having access to the latest pricing information and technology
is critical for investors to make informed trading decisions. As such, the role of
technology and data in liquidity pricing will continue to be a crucial factor in the success
of liquidity brokers in the years to come. To find out more about the importance of
technology, data and liquidity brokerage best practice check out the Finalto Brokerage
Series
here.
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