Feature: the rise and rise of mobile trading

Feature: the rise and rise of mobile trading

When it comes to mobile trading or the world of ‘on-the-go’ execution, it’s all about apps. The explosion of apps on the market enabled by the advent of smart phones has taken even the keenest industry analyst by surprise. On Apple’s iTunes, consumers can download iPhones apps for trading almost any asset class including foreign exchange (FX), futures and options as well as spread betting products.

This stellar opportunity in mobile trading is reflected in the growth of apps as a whole. A forecast issued last December from market research firm IDC revealed that the number of downloaded apps is expected to increase to 76.9bn worldwide by 2014 (2010: 10.9bn), with mobile apps to grow at a CAGR of 60% through 2014 and mobile app revenues surpassing a massive $35bn by that point.

Although the evolution of mobile trading and associated apps is still in its infancy, recent growth has been exponential and it seems that almost everyone in the industry is getting involved. Howard Boville, managing director for Trading Systems & Financial Systems at BT, says: “It’s really right across the board in respect of the whole trade cycle. The scope is retail, sell-side/buy-side institutions and liquidity venues. It’s just about anybody using mobile trading to communicate with folks.

“Mobile trading allows people to be agile in where and when they work,” he adds. “So, if it provides benefit in terms of trading, market participants will be using the available technology tools. And it will only grow as traders have the opportunity to communicate to greater numbers of people by using the technology.”

Indeed, with such mobile devices, a trader could be watching a video on one screen, talking on a headset to a customer whilst IM’ing one of their research analysts. They could also be receiving text and viewing information off social media such as Twitter.

Recent developments and new product launches in the mobile trading space have come through thick and fast. In June 2010, DAS Trader, which its maker claimed was the fastest trading software for the US stockmarket, released new remote trading apps for Apple’s iPhone and iPad.

DAS, whose app offers equities, options, futures and forex in a combined platform, touted direct access order routing and superfast execution on the way to work or at home. While iDASTrader interfaces are specifically designed for the retail investor, DAS’s infrastructure is designed to be relevant to the most sophisticated institutions as well.

Even the large investment banks are getting in on the act. Take JPMorgan, which in March 2010 ported a version of its MorganDirect platform to the gadget, allowing armchair traders access to forward, swap and option transactions for around 300 currency pairs.

Portable trade management

Last November, FFastFill, the UK AIM-listed provider of application services to the global derivatives community, enabled its applications for use on the iPad. As a result, the full suite of FFastFill’s exchange connectivity and functionality from front to back office was made available as an iPad application (a pipeline to over 50 exchanges and platforms), offering institutional clients an additional flexible trading and monitoring tool.

BT, which provides hardware for voice traders across the asset class spectrum, has developed software-based applications that complement that hard turret that resides on a trader’s desk. I-Trader, a BT collaboration suite, effectively brings together the various communities that a trader may have (e.g. directories on Linked-in, Outlook, Yahoo) and encompasses video conferencing, mobile, email and instant messaging.

BT’s Boville explains: “I-Trader brings that all together in an integrated fashion and allows traders to interact/transact in the most optimal way, based on all the information that may be thrown at them.”

Henrik Dyrholm Holst, head of platform management, Saxo Bank, believes that mobile trading and associated app devices are very much here to stay. He says: “As mobile devices have become more and more advanced, the trading experience that can be delivered to clients is no longer just a case of basic market access when a desktop PC is not available.”

Dyrholm Holst says clients are increasingly expecting more advanced features when they trade on a mobile device, ranging from technical analyses to incorporation of market research, portfolio management and news. “Mobile trading caters very well to individuals who need to have constant access to the markets and their portfolios,” he says.

“That said, we’re still in the early stages of what we call smartphone mobile trading,” he says. “Browser-based mobile solutions that have been around for quite a few years offering basic access to markets and those companies that made mobile trading a priority early on, have enjoyed a first mover advantage, which has been evident in the demand from clients and the increase of trades placed through mobile devices.”

New approaches

In coming years, the Saxo Bank executive believes we will see two approaches to offering mobile trading, namely: native trading app solutions and a web-app approach. “With the explosive growth of native apps being distributed through app stores, many companies are developing native trading solutions for individual mobile platforms and distributing them through the various app stores,” he says.

“Others choose to adopt a web-app approach,” he adds. “Utilising the increased open sourced standardisation of mobile browser capabilities such as WebKit and HTML5, which offers a viable alternative to native development and at the same time targets a large number of mobile platforms.”

Challenging the desktop?

In terms of how mobile trading is viewed in the markeplace, Dyrholm Holst says: “At present, mobile trading is not viewed as a viable alternative to a desktop setup and it may never be. But with the introduction of tablets and the increased ‘screen real-estate’ of the tablet form, companies are faced with a unique challenge of creating a platform that lends itself to the touch-based interface of these devices.”

He also contends that an “interesting challenge” in this space, is “providing a mobile trading platform that caters to both the frequent trader and the portfolio manager”.

In terms of actually trading on such mobile devices, BT’s Boville acknowledges that presently they are “not witnessing widespread adoption of tablets on the trading floor.” That said, BT’s trading systems business has had a touch-screen tablet-like turret in the market since 1995.

Boville points out: “There are some banks utilising that capability as a preference to using touch screen as opposed to the button. And, whilst there is currently not a widespread adoption in terms of using tablets, we envisage an uptick and it becoming more prevalent.”

He adds: “We’re starting to develop beyond the i-Trader piece, looking at the whole concept of tablets and how one integrates them into the trading environment. So, you’re no longer just thinking about mobile trading in terms of a mobile device, which is used for voice communications - you’re using the full multi-media capability of that mobile device.”

New problems

However, there are interesting problems posed by the tablet. One centres on how to ensure that that tablet is secure in the domain it operates within. Boville says: “How does one ensure that the person using that tablet is actually used by the person that they say they are, and when they’re executing transactions within a firm are they initiating these on behalf of X or Y bank?”.

A trader may want to come into work and use their own personal i-Pad. “So, partly they have it for their own personal use, but when they’re in the trading environment it can be ‘locked down’ to do the trading,” adds Boville.

As to longer-term implications, Dyrholm Holst argues: “We’re currently in a transition period where companies are looking at different ways of delivering an optimised trading solution for mobile devices, either by adapting current trading platforms or by developing a unique trading solution for each form factor.”

One limitation that will remain with mobile trading is the perceived lag, however small, of any wireless device and how it impacts the flow of data and trade execution. There is also the limitation of the physical size of mobile screens, although the new larger sized Blackberry Torch device is a step in the right direction.

Embracing the tablet

In the short term Dyrholm Holst envisages that we will see companies working to establish a “solid presence in the smartphone space by having either native applications or web-based solutions that ensure an optimal trading experience on a mobile, then moving on to the tablet and the unique opportunities and challenges that this form factor poses.”

Differentiation in offerings will be driven by client type, providing unique solutions catering to both the active trader and the long-term investor, he argues.

Beneficially to mobile device end users, voice minutes are on a downward trend. And, with Intel producing nfactor chips that require less battery power, mobile devices will benefit from greater processing capability and be more and more like a computer.

Boville says: “From the application perspective an interesting question is: ‘Who will purchase the applications?’. Will it be the firms that buy these mobile apps for the traders, or will the traders buy their own apps because they want particular tools?”

Mobile limitations

Matt Woodhams, head of e-commerce (EMEA) at GFI Group, a provider of wholesale brokerage and electronic execution services, says: “We tend to find these work pretty well in a global business...where people may not be in the office but maybe want to see European or US markets.”

For this wholesale intermediary adding a “mobile view” is all about adding to client choice in the way they wish to transact - either electronically or via the phone. Just as choice exists using one of GFI’s GUIs or an API to trade programmatically. GFI’s clients really depend market to market, and in the fixed-income market they include sell-side institutions like Morgan Stanley, Goldman Sachs and JPMorgan.

Woodhams who heads up e-commerce strategy for GFI’s in Europe adds: “For the wholesale space they are a quite a nice add-on in a 24-7 world to access real-time information. However, in terms of physically transacting across them, I have doubts that the wholesale markets would ever be on the mobile channel.”

“It is one thing to trade 100 Vodafone or BP shares whilst you’re sitting in a café or your armchair, but quite another to trade a clip of say $100m worth in i-Traxx products,” Woodhams says.

“The regulatory controls around wholesale markets need to be and are correctly more stringent than they would be for say spread betting purposes.” That confines the value of the mobile device as a transaction tool in the wholesale space.

He adds: “By contrast I can see the application of mobile devices for spread betting or buying stock on a personal account backed up by a credit card or a bank account. That’s not systemically so worrisome.”

Given that GFI’s hybrid broker business model is wholesale in nature, the firm does not offer execution across the mobile medium, with the data provided by GFI being proprietary to the broker itself.

“What we do offer in terms of data is rather more indicative in nature and complementary to the ultimate trading decision,” says Woodhams. “Fundamentally for us it’s all about getting data in front of people, which is less constrained by technological advancements than say interactive trading on a mobile phone would be.”

Mobile data delivery

With traders at many large institutions tending to specialise in particular asset classes, critically they want to see more of a “breadth rather than depth” of data and prices related to their specific markets, the GFI executive says.

In the credit space, GFI trades index products such i-Traxx, where through a limit order book users can view the best Bid/Offer prices, second best Bid/Offer, etc. Woodhams explains: “On CreditMatch, GFI’s central limit order book, if you’re sitting in your office you could click on the prices and actively trade. This would be a similar to if one were looking an exchange screen where you wanted to buy shares in FTSE 100 stocks.”

GFI’s complementary product to its CreditMatch is CreditMatch Webview. This enables a user on Blackberry or iPhone devices to log in to view market prices. Woodhams points out: “While on the web version one cannot trade, clients do get to see the markets real time. And, at that point we provide a telephone number that can be clicked on to call GFI, if required.”

As to the future and where the market will be in three to five years time, BT’s Boville contends it’s perhaps a little “too hard to call”. He says: “The technologies one thinks will be adopted are never adopted quite as fast or as fully as envisaged. Typically the IT cycle is around 10 years, but on top of this there are many developments that occur along the way that cause surprise. But we’ll probably be in a completely different place and phase to where we currently think we’ll be.”

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