The evolution of sell-side execution management

Few areas of sell-side operations have changed as much as trading floors in recent decades. To put these changes in context, let’s examine where the biggest changes have occurred – the way deals are made. How has the industry evolved, and what technologies are banks using for the next step in this evolution? 

Rise of deal-making technologies 

Digitalization in banking saw significant advancements in the 1980s and 1990s. During this period, banks started adopting electronic systems to manage accounts and transactions, reducing the need for manual and paper-based processes.  

By the early 2000s, digitalization further shifted trading to electronic structures, increasing efficiency and enabling faster and remote transactions that reduced the need for face-to-face interactions. That period saw the following advancements: 

• The rise of algorithmic trading, which upped the ante by enabling traders to transact according to pre-programmed instructions based on a wide range of variables including volume, price and time. 

• Data-driven digital automation, which significantly enhanced both the speed and volume of deal-making while also mitigating the risk of human error within the process. 

As automation became more widespread, investors and their counterparts sought additional methods to utilize the increasing amounts of data available and improving technology for competitive advantage. One such development was high-frequency trading, which utilized advanced digital networks and high-powered computers to facilitate faster trade execution on exchanges. 

Fixed-income traders have also improved their technological capabilities to increase the speed and efficiency of operations. However, some transactions still rely on personal interactions between buyers and sellers. 

This is changing lately, as artificial intelligence and sophisticated software have begun enabling banks to price requests for quotes by quickly finding highly correlated trades within their growing pools of historical trading data. Additionally, they have been able to automate more liquid trades that meet specific criteria, thus freeing traders from routine activities to focus on higher-value transactions that require more customized expertise. 

Additionally, technology enabled the sell-side to trade more quickly and efficiently and has provided them with workflows to help fulfil their regulatory responsibilities. As regulatory frameworks governing banking operations expanded, particularly following the global financial crisis of the late 2000s, and Bloomberg has developed solutions to ensure that banks can access and manage the necessary data to meet the requirements of financial regulators. 

Sell-side trading execution in the new phase 

Following the rapid advancements in the past two decades, we are at another critical juncture for how technology is transforming deal-making. Dan Tsou, Head of Sell-Side Execution at Bloomberg, observes: “Technology has brought sell-side trading to a new threshold today, one that has emerged from the convergence of a new set of challenges.” 

Among these challenges Tsou points to regulatory requirements, including the reserve of larger capital buffers against financial distress, which are becoming more complex and change frequently. 

At the same time, buy-side traders are diversifying their activities, utilizing automation to realize efficiency gains and trading in more asset classes, placing additional pressures on the sell-side to match ever-more complex orders at a faster pace and in greater volumes. 

“Mandatory regulatory changes and resource constraints are significantly reducing discretionary spending, while emerging innovations are generating a growing pipeline of necessary projects – forcing firms to do more with less,” says Tsou 

Consequently, banks are looking to wring more efficiency from their operations. By seizing on artificial intelligence-driven models and automation processes, they seek to mine insights from their own trading data to inform future transactions, obtain more accurate pricing, monitor more markets and execute at the lowest possible cost.  

They are also looking to complement their information with data from outside their own systems to give them a holistic view of markets and the risks they carry in pursuit of gaining an edge over their competitors. 

Streamlining trading, keeping accuracy 

Achieving the level of customization and interoperability between internal systems and external data and models necessary to achieve the goals outlined above is not an easy task. “Technology is changing faster than ever at a time when the discretionary spending power of banks remains at a low. The question for them now is how can they attain the capabilities that will enable them to prosper in this new era of technological opportunity and rising competition, complexity and demands?” says Tsou. 

This can be achieved by implementing solutions that let banks streamline their execution processes, accelerate transactions, and provide the most accurate pricing possible. 

To that end, Broadway Technology, which was acquired by Bloomberg in October 2023, added transformative technology to elevate trading performance and modular access to Bloomberg’s Sell-Side products. Now, Bloomberg’s sell-side offering provides banks full flexibility to accelerate system performance with co-location services and streamline execution workflow across their entire trading system stack.  

The technology layer combines trading solutions and exceptional connectivity built on API-based open architecture, all of which provide the flexibility and foundations for further proofing banks’ tech stacks. 

“Bloomberg Broadway is a shift from Bloomberg’s buy-and-use model to a more flexible buy-and-build approach” explains Shabd Swarup, EMEA Head of Broadway Professional Services . “This empowers banks to design tailored combinations of data, technology and infrastructure that align with their unique trading strategies and operational needs.” At the heart of these new capabilities is The Toc, which is the advanced application aggregation and workflow engine. The Toc allows banks to seamlessly integrate their proprietary data and models with external intelligence and technologies, creating a cohesive trading environment.  

This scalable, high-performance distributed computing product has supported major financial institutions for more than two decades, enabling them to integrate their proprietary algorithms -their own secret sauce- with broader datasets and analytics models. Now, with Bloomberg Broadway, firms can use The Toc alongside Bloomberg’s comprehensive suite of tools and services to achieve greater flexibility, interoperability and performance across their trading infrastructure.  

While currently used in fixed income execution management, the underlying technology is designed to extend across other critical sell-side functions, including order management and risk management, enabling deeper integration throughout the full trading lifecycle. As these solutions evolve alongside the market, there is significant opportunity to unlock even greater value across sell-side teams.

Interested to learn more about Bloomberg Broadway? Click here.