What Influence Will COVID-19 Have on Future Trading Technology?

Negative prices, volatility, remote working and increased activity - how will this shape trading technology?

There is little that the coronavirus pandemic hasn’t influenced in some way. The effects can be clearly seen within the trading markets – both good and bad, but one this is for certain, the virus has certainly left its mark.

Heightened levels of volatility, negative prices, renewed levels of interest in the trading space – all of these have happened over the past few months, and all of it is directly related to COVID-19.

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Because of this impact on the trading space, it is only natural that trends will emerge from this pandemic that will last for the long-term, such as working remotely, increased interest in trading and more.

Supporting all of this change and activity in the markets has been trading technology and the infrastructure that supports the industry. As Finance Magnates has reported, the systems of trading providers have struggled to deal with the higher levels of trading activity.

Not only that, but the industry was well and truly caught off guard by negative oil prices with the West Texas Intermediate (WTI) May futures plummeting into negative prices in April. Until now, many trading platforms couldn’t handle negative prices.

Already, however, the industry has adapted. MetaQuotes, the provider of one of the most prominent FX trading platforms, MetaTrader 4 and 5, added negative price capabilities to its MetaTrader 5 platform.

How will COVID-19 influence trading technology?

This begs the question, how else might COVID-19 influence the future of trading technology? According to Spotware, the provider of cTrader, one of the most prominent FX and CFD trading platforms, the emerging trend of more flexible working conditions and working remotely post-COVID-19 will have an will influence trading technology going forward.

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Panagiotis Charalampous, cTrader Spotware
Panagiotis Charalampous, Head of Community Management of cTrader at Spotware

“As a result, the “work from anywhere” need can be translated as a “trade from anywhere” need in the trading world. This has increased the demand for multi-device access in trading services, especially mobile apps and cloud services, so vendors that were able to provide such services to traders have now gained a competitive advantage. The rest will have to play the catch-up game for now,” Panagiotis Charalampous, Head of Community Management of cTrader at Spotware told Finance Magnates.

“We have also seen major market movements, unprecedented market volatility and rare events like negative prices. The volatility is expected to stay with us for the next months and this has been seen as an opportunity for more people to engage in retail trading in order to take advantage of this situation. 

“This has resulted in an increase in the demand for retail trading services but has also put stress on the trading infrastructure, as well as exposed certain limitations and weaknesses of the various components. For example, the negative prices that were seen on WTI had caught the entire industry unprepared. Such events have now alerted industry participants to better prepare for potential future repetition.”

Were negative oil prices a one-off?

Despite negative prices taking the industry by surprise, according to Charalampous, Spotware has not seen a significant demand from broker’s to have negative pricing capabilities, as many industry participants expect it to be once in a lifetime event.

Nonetheless, he points out that negative prices are something that technology providers need to consider seriously since there is no guarantee that such events will not happen again. Therefore, Spotware is considering adding such capabilities to its platform in the future.

Trading infrastructure feels the pressure

Coronavirus has created a number of challenging situations for brokers and trading providers – large volatility, trading activity and historical and unprecedented price movements. All of this has put a strain on brokers’ resource, especially in terms of client support.

“This has resulted in an increased support load on brokers’ front offices. And all of this had to take place in the midst of lockdowns that forced brokers and technology providers to restructure operations and processes to adapt to a “work from home” environment. On the side of the technology infrastructure, the increased trading activity did not cause any serious issues since trading platforms were developed with activity spikes in mind,” Charalampous explained.

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