Leveraging Technology to Navigate Volatile Markets

Much as a pilot flying through a storm relies on the plane’s instrument panel to keep on course, investment professionals caught in today’s turbulent markets need to take full advantage of technology to navigate an uncertain environment. Without it, they may find themselves flying blind.

In the midst of economic turmoil arguably not witnessed in generations, firms are under enormous and often competing pressures: sustain profitability without compromising service; retain clients and earn their confidence; maintain a competitive edge while minimizing risk. Traders and portfolio managers have an opportunity – and a responsibility – to leverage the best tools available to master these many challenges. In a volatile market, it is incumbent upon firms to use all means necessary to drive efficiency, which is critical to operational performance and profitability.

Through integrated technology solutions, firms can eliminate dual processes and procedures, increase efficiency, and reduce the risk of errors, all of which should translate to lower costs and greater productivity. Moreover, firms that are able to devote less time to administrative and operational issues have more time to focus on their investment strategies and take advantage of opportunities, with the goal of improving results.

The question for many firms, of course, is: what is the right combination of technology tools that will deliver the greatest value? The options are many, and deciphering them can be daunting, even to the most sophisticated firms with big IT budgets. Sitting on the sidelines, however, is not an option in a market that waits for no one.

Consider, for example, the relatively recent emergence of dark pools, algorithms and execution management systems. These can all be effective differentiating tools for firms willing to invest the time and resources to make them part of their everyday operations. Integrating them into the order management system is critical for streamlining and eliminating steps in the process from opportunity to decision to execution, which in turn delivers significant efficiency gains as well as a competitive advantage in the market. Trading technology is evolving rapidly to enable firms to speed implementation of these tools and reduce transaction costs.

At a time when firms are being squeezed on profitability, the temptation to reduce or put off technology investments is real. Yet, while costs are an understandable concern, the cost of doing nothing is far greater and potentially damaging in the long run. Firms that lag in technology run the risk of steadily increasing overhead, inefficient allocation of staff resources, and missed opportunities. In the absence of integration, manual processes slow down the investment process and limit a firm’s ability to follow through on its investment directives.

During turbulent markets, a focus on fundamentals – efficiency, accuracy, quality, and client service – will help firms maintain operational stability. Advancing technology continues to enable opportunity for greater efficiency, and firms that take advantage of it will be better able to navigate in this uncertain economic environment and emerge as stronger players in the future.

John Bird is Director of Product Marketing for the Trade Order Management & Compliance group at Advent Software. He has been at Advent for over 12 years working in sales, services and product management. Prior to Advent, Mr. Bird worked in the investment management industry in San Francisco, and was a