Welcome to the latest episode of At the Forefront: Fintech Conversations!
To learn more and listen to our previous episodes, click here.
In this episode, Forefront Vice President and Head of Content Sam Belden sits down with two financial services consultants who bring two distinct perspectives on the industry: – Jeff Estella (Principal at Estella LLC) and Michael Cashel (Managing Partner at CapMarketsIQ). Together, they unpack key capital markets initiatives and observations for 2024, including new regulatory priorities, liquidity trends on the buy and sell sides and the state of investment technology and data.
Jeff begins by describing major market trends from an asset management perspective. With continually shrinking margins and cash investments yielding 4-5% returns, many asset managers are asking themselves how they can lure clients away from Treasurys and CDs and back into active or passive management. In addition, an increase in wealth management M&A activity has many considering the ramifications – will core asset owner clients be impacted in a way that is accretive or dilutive? Many firms are also considering whether to “stick to their knitting” and work with outsourced or supplemental providers for functions outside of their core offering.
Next, Michael offers his thoughts from a brokerage, ATS and technology perspective. With T+1 going into effect on May 28, Mike has observed extensive coverage on software-related issues, but little discussion on how the buy side will finance itself as it adapts to the shortened settlement cycle. How will EU- and APAC-based managers who are used to longer cycles be affected? Mike identifies an additional focus on information management technologies as the deadline approaches. Finally, he notes the SEC’s recent transparency regulations, which may have the potential to increase the amount of information leakage from mutual and pension funds.
Jeff and Mike go on to discuss the complexities of today’s liquidity landscape for both the buy and sell sides. Jeff states that the buy side is steadily becoming more sophisticated in terms of cross-product trading, workflow automation and partnerships to bolster their offerings. From the sell-side perspective, Mike speaks on recent ATS success stories, recapping major developments from industry leaders like OneChronos, PureStream and IntelligentCross.
The conversation then pivots to how investment technology providers can respond to these dynamics and provide quality data and insights to market participants. Michael recaps some of the biggest issues facing OMS/EMS providers and their clients, such as demand for advanced fixed income offerings, mounting regulatory pressures and problems with legacy tech. Both Mike and Jeff highlight stickiness as a key quality for vendors, and stress that third-party providers should focus on product breadth, stability, scalability and service, as they may be valued even more than cost in today’s landscape.
The conversation closes with a brief foray into a different industry. Mike discusses his involvement as a board member of NWTN Motors, a Dubai-based electric vehicle company – how he got introduced to this unique opportunity, what he’s learned and the unique capital markets perspective he brings to their team.
See below for a breakdown of what was discussed. Happy listening!
Timestamps:
1:25 – Buy-side and sell-side priorities for 2024
7:10 – The state of the liquidity landscape
14:48 – Key trends for investment technology and market data vendors
22:45 – Mike’s role as a board member of NWTN
