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Overcoming Challenges to Capital Markets Innovation

Headshot - Exegy CEO Jim O'Donnell
Jim O’Donnell

Exegy Chief Executive Officer Jim O’Donnell recently was named Most Innovative Financial Technology Executive at the A-Team Group’s Innovation Awards 2022. Jim was asked for his thoughts on the key challenges facing innovators in capital markets technology.

Today’s capital markets infrastructure challenges are not for the timid.

Trading volumes have exploded in the past two years, in part because of pandemic-related volatility, some of which was driven by the rise of retail trading.

That increased retail participation is altering traditional trading patterns as well. Trading activity, which once clustered around opening and closing bells, now strains infrastructure throughout the trading session.

The ongoing digitalization of trading is making many global markets more transparent, more efficient, and easier to scale—across regions and asset classes. However, the evolution in capital markets comes with heavy demands on firms’ trading systems.

Most importantly, changes in market structure are putting pressure on all technology providers to lower the cost of access to the markets. Addressing this challenge is central to Exegy’s mission since it directly affects our clients’ ability to grow.

These developments were at the heart of our merger last year with Vela Trading Systems, and a major reason why Marlin Equity Partners was interested in lending its financial backing to the venture. Our team at Exegy showed Marlin that by combining our resources—Exegy’s established real-time market data capabilities and predictive trading signals with Vela’s execution and enterprise expertise—we could become more efficient, and help our customers become more efficient as well.

And we’re seeing those efforts play out now:

Axiom—Exegy has launched Axiom, a consolidated feed that combines the best features of the legacy SuperFeed and DataPort products. Axiom offers access to more than 300 global markets, including equities, derivatives, and cryptocurrencies. In addition to delivering high-quality normalized market data, Exegy is enhancing Axiom with signals from our Signum suite: Quote Fuse, which predicts the stability of NBBO prices for US equities, and Quote Vector, which predicts the direction of the next changes to those prices. We believe that Axiom’s differentiated content, as well as the merged Exegy’s reputation for stability, ease of use, and superior managed service, will make it a leading global Data-as-a-Service solution.

Signum Strategies—You’ll be hearing more about how we are leveraging Exegy’s Signum signals through AI-powered strategies derived from them. For example, how we applied machine learning to the summary data created by Liquidity Lamp, finding patterns that predict reserve order volume and can form the basis of alpha-generating strategies. Or how Quote Fuse and Quote Vector can enhance a VWAP algo to make it “intelligent,” improving execution costs by over two basis points.

In each case, we are driving toward the same goal: Using Exegy’s cutting-edge capital markets innovations to help our clients gain value more efficiently. This approach enables smaller, up-and-coming firms to catapult into new capabilities, while allowing larger, more established companies to scale up quickly without the drag of long R&D processes.

The industry is recognizing our efforts in this area. I was gratified that the A-Team Group acknowledged the pioneering direction of our corporate strategy with their Innovation Award, just as I am proud of our company’s recent A-Team Insight Awards Europe, focused on our direct market data feed and cloud-based market data delivery solution.

The release of our new Combined Product Portfolio in February has met with strong interest, underlining how firms across the trading ecosystem appreciate the importance of integrated tick-to-trade solutions.

The breakneck pace of change will not slow down anytime soon; in fact, it will only get faster. Markets will continue to evolve, posing infrastructure challenges that require creative solutions. Today’s capital markets innovations will become tomorrow’s table stakes. At Exegy, we plan to stay in front of this change—bringing even more capabilities into our company, strengthening our existing solutions, making them more performant, more resilient, and more economical.

If your firm would like to be a part of that pace-setting progress, contact us.