Tom Whelan, Instinet’s Global Head of Instinet Technology Solutions spoke to Markets Media’s Terry Flanagan about their winning Best E/OMS at the inaugural European Markets Choice Awards 2021.

How did you feel about Instinet Newport winning Best E/OMS in the recent 2021 European Markets Choice Awards?

It felt great that our Instinet Newport^® platform was recognized with this award. Since it was obviously a very interesting year, I felt like the team really stepped up. We handled record volumes and message traffic. We also introduced a new front office division called Instinet Technology Solutions, whose purpose is to distribute, service, and support our technology solutions for both buyside and sellside consumers of the platform. So, being recognized by clients in a year where we had such a challenging backdrop and fundamentally changed the way Instinet operates is really exciting.

What are the main challenges you’re hearing from clients post MiFID and post Brexit? How does Newport address them?

Best execution demands are not changing. MiFID and Brexit bring challenges, and liquidity fragmentation seems to be getting worse, not better. When the buyside uses Newport, we help them meet these challenges with three distinct solution sets: a rich EMS front end with decision-making support, liquidity sourcing tool sets and an analytics package that helps both evidence and refine best-ex regimes, with real-time analytics that can be deployed to understand the liquidity; and we offer workflow automation, which includes things like broker wheels, so that easier orders can be automated away and competitions for execution quality can be conducted.

What has been the impact of Covid, and what lessons have you learned?

It’s been remarkable to see how well we’ve all operated remotely. At one point in the early days of the pandemic, I think 98% of Instinet’s global employees were working from home. And that was when volumes globally doubled, if not tripled.

Some of the challenges are around bringing new employees onto the platform, especially junior employees who are still a little bit green and need to be trained. That has been a bit more difficult.

Overall, employees have had an opportunity to live out some work-life balance trade-offs, and it will be interesting, as we return to the office, to see how much flexibility there will be. Culturally, firms may even find themselves in a position to attract or retain talent depending on what sort of balances they let their employees strike. Overall, it has been an interesting experience and it will be fascinating to see how things go forward.

What technology do you think will play an important role in the future? What is Instinet doing to meet the challenges?

We’re embarking on a cloud migration as we speak, and have moved our transactional data to the cloud. While we’re in early days, one of the first client deliverables will be post-trade TCA. We expect to get good performance and scale from that solution.

About a year ago, we embedded a Chrome browser inside the Newport container and rolled out a new version of our real-time analytics, called Indigo Live, as an HTML5 app. We’ll also be modularizing the front end and transitioning from a sort of “thick client”, to a “thinner client” application.

The market feels like it wants to discover new standards in desktop messaging. We’ve done some work on that — bringing it to our own applications and driving more interoperability across our own applications. We also see increased interest in APIs. So, for example, as the buyside invests to align their investment processes with their trading, they frequently look to impart some of their unique IP into their execution workflow in different ways. And APIs are helpful in enabling that. In addition, as we look to provide OMS solutions for the sellside, we’re building out integration points for them by way of APIs, more for operational reasons.

There has been an increased focus on and interest in broker wheels. How do you view them?

I think the benefits are pretty well established. It’s a great way to evidence best ex. It’s an effective way to bring on a new counterparty. It fits the theme of doing more with less — it’s a simple and elegant solution.

A couple of areas that people new to broker wheels might not think about are: quality of data and TCA. With Instinet you can see your analytics, do your broker wheel, and you can have your EMS all in one place. That’s an important benefit from a data quality standpoint, because you want to draw the right conclusions and you don’t want a lot of additional overhead to do the analysis on who’s performing well and who’s not performing well.

The other part of that is operational risk. As people move down the automation path, you want to make sure that guard rails are up. So, as we think about pre-trade validations of orders and outlier identification, we spend a lot of time and energy to ensure that as you’re automating your order flow, you’re doing it safely, and that operational headaches are minimized and quickly mitigated.

It will be interesting to see how broker wheels can benefit from machine learning or AI. The simple solution is providing a tremendous amount of value, but it will be interesting to see how we can make things even better.

What influences do you think will continue to shape the European market in the future?

Brexit continues to have a big impact on the way people trade and the way sellside firms, especially, have to operate. The regulations will continue to diverge, which means technology has to be adaptable and context-sensitive, since the choice of venues, brokers, and workflows may be different depending on where you’re sitting — even within the same organization. And then due to fragmentation, you have rising operational costs and liquidity is harder to find. Automation and outsourcing solutions need to be smarter. Data quality is fundamental here, as tools for visualizing and analyzing data and making evidence-backed decisions become increasingly important differentiators.

©Markets Media Europe 2021

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