How can the FX industry reap the benefits of smart data?

The need for ‘smart data’

Operations in the financial industry have changed immensely over the past two decades since the advent of electronic trading. The multitude of electronic platforms that can now handle the volume of transactions in FX has opened up the market. Yet, the multiplicity of trading venues, the heterogeneity of technological interfaces and the variety of data protocols used across these platforms makes it difficult for FX participants to monitor market information and assess their risks in real time.

There has been a move by institutions to try and gather as much data and information as possible. However, the gathering of raw or ‘big data’ on its own is not enough. What market participants can now benefit from is ‘smart data’. This is data that has been normalised – i.e. standardised – and presented in a unified format. It’s a logical step that consistent transaction messaging language leads to more streamlined operations.

Artificial Intelligence (AI) can quickly identify erroneous and incomplete data and transform only the clean and enriched inputs into smart data that can be used across any part of an institution’s trading operations.

In an industry where time to market is imperative, the ability to license an already-available secure platform is a prudent option. The neutrality of a third-party supplier will engender trust in the data, can stimulate trading on the platform and link multi-asset participants to one source of liquidity. This will also allow for transparent benchmarking of prices and comparison of market share.

Why should the FX market care?

Developments in technology means that data can now be processed with practically zero latency. In J.P. Morgan’s latest e-trading survey, 82 per cent of respondents said that access to real-time data was the most important factor within the overall sphere of data services.

But having access to data is only part of the equation. Having the ability to gain insights through smart data in real-time, with guided options, enables the FX trader to make a judgement call on how to proceed. The ability to provide deeper insights drives customer loyalty and consequently leads to a more stable and profitable business.

Our client, Jack Jeffery, Chairman of Mosaic Smart Data, has spent more than three decades in the financial industry, with roles at EBS, ICAP, and MTS. He has also been a member of Bank Of England’s Joint Standing Committee and the Federal Reserve’s FX Committee.