FinTech Guru Cassina: “The Virtual Trading Room Is Closer Than You Think”

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Matteo Cassina, former head of prime access at Goldman Sachs, is a long-time advocate for the electronization of markets.

From serving the needs of the first wave of fintech players, such as online brokers and digital wealth managers at the turn of the millennium, to later roles at Merrill Lynch (now Bank of America) by selling execution services to brokers and prop traders, and as European President of Citadel and then UK CEO of Saxo Bank, he has been at the forefront of the changes that have swept the trading floor over the past two decades.

In addition to providing bikes to Bobby Axelrod in Billions, he now sits on the board of Adaptive, a UK fintech that supplies software to banks and other financial firms.

FN spoke to him about his experiences in a quarter of a century of financial innovation, what links financial sense and top sport, and what lies in store for the future of the trading floor.

Have the markets evolved as you would expect during your career?

Yes, although it has been a long journey, the future Nicola Negroponte foretells in his 1995 bestseller Being digital has finally become a reality. I’ve been a privileged passenger on this trip for the past 25 years and when I think about it and look at what’s going on today, with people working and trading remotely, you can see how far we’ve come.

Mobile technology, and with it real-time access to information, has played a key role in this evolution. In 2001, I worked at Goldman Sachs where you had to be a partner to have a BlackBerry. Anyone who ran a business unit, risk management function, or trading portfolio had no way of having real-time visibility of risk or interacting with the system outside of the office.

A BlackBerry became ubiquitous in 2008 when I worked at Merrill Lynch, as the world’s biggest financial crisis began to unfold. Even then all we had was a daily email summarizing the company’s income and income statement. Traders, risk departments and management would come home every night not knowing if the bank would implode overnight and we would be sent home with our goods in a cardboard box the next day.

On the day of Lehman’s collapse, I was working for Citadel Securities, a company whose revolutionary infrastructure and risk pricing would accelerate the electronization of markets. What followed was a period when the speed of messages increased 100-fold and the technology’s ability to process messages increased from 30 messages per second to over 100,000 messages per second.

Technology has become exponentially cheaper to operate, democratizing access to technology. By the time I found myself at Saxo Bank in 2014, on second thought, we were pretty prescient in offering the technology as a platform to other banks and brokers and our own offices in 26 countries, allowing them to trade. no IT staff and (potentially) no office.

Tell me about your experience with the HBO drama series Billions…

After leaving Saxo, I decided to devote time to another passion: cycling. I took full control of Passoni, a maker of premium titanium and stainless steel racing bikes, the Ferraris of the cycling world.

This period coincided with an increase in the popularity of cycling as an activity among financial professionals. Both cyclists and traders strive for continuous performance. So it’s no coincidence that some of the world’s most famous investors are avid cyclists as well.

When Bobby Axelrod arrived with a Passoni on Billion, it was a pleasant surprise, but not entirely unexpected.

What are you working on now?

I remain an investor in sportswear, cycle racing, and esports companies, but have always been a strong advocate for electronically driven market efficiency. I didn’t want to stray from the industry just when things were getting interesting, so I’m now applying my experience as a non-executive director at Adaptive, one of the fastest growing UK tech companies in the world. develops cloud trading solutions on open API and with thin web platforms, perfect for working from home nowadays.

How do you think the pandemic will affect the future of the trading floor?

The pandemic is undoubtedly accelerating the electronization of markets, and its impact on trade will be significant. Technology will continue to change the way we work and do business, and with banks reporting record second quarter profits in the form of trading income, the smartest will reinvest some of those trading gains in innovation to build rooms. virtual market.

While the innovation of the last 25 years has been about connectivity as speed, the next phase will be one of focus and integration, and three developments, in my opinion, will allow that.

First, margins will continue to shrink and financial markets will move towards a 24/7 futures opening, with real-time correlation that needs to be monitored through a flexible and integrated infrastructure. Many assets will be traded short and only electronically, following the same market model that has evolved for stocks, listed derivatives and currencies.

Second, greater automation will lead to a convergence of market models, with OTC and listed securities settling into hybrid models.

Third, the existing infrastructure will be replaced by a new model allowing any actor in the value chain to manage a [front-to-back] and a multi-asset infrastructure, hosted in the cloud and with real-time access.

This integration will be achieved by gradually replacing the legacy monolithic infrastructure with modules integrated via an open API, and fully and easily interoperable with other modules.

Is the golden age of the voice trader over?

Yes. The virtual trading room is closer than many think. And while some aspects of the overall business infrastructure will continue to be commoditized, the real competitive advantage will come from the ability of banks to fully automate and digitize their business models, not hang on to voice trading.

Global threats – natural disasters, pandemics and cyber threats to name a few – will continue to occur and create shocks in financial markets. Crises such as the current one have highlighted the high degree of correlation between asset classes and geographies, making real-time redundancy testing across multiple locations and asset classes critical. It won’t be long before policymakers and regulators follow suit.

Trading should brace itself for some major near-term changes, but its future will be rosy. Technology has finally caught up with the aspiration to have real-time, electronic and transparent financial markets, which we should all be applauding.

The only obstacles are the changes in behavior and mindset that will help banks accelerate the transformation of their businesses in a way more suited to the way we will live and work in the future.

The old trading room is dead, long live the new trading room!

To contact the author of this story with comments or news, email Trista Kelley


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