Market data industry insights with Interactive Brokers

At Databento, we're fortunate to work with customers and partners with insightful perspectives within the market data industry. Occasionally, we get the chance to chat with industry thought leaders and practitioners to get their insights on what's driving changes in the market data industry, what they're working on, and changes they predict on the horizon.

For this edition, we spoke with Steve Sanders, EVP of Marketing and Product Development at Interactive Brokers (IBKR). Given IBKR's global presence and household name, we wanted to get Steve's thoughts on market data APIs, machine learning, and his predictions for what's in store for 2024.

With the rise in market data APIs, we asked Steve how the role of automated trading would evolve within the company and the industry.

The prevalence of automated trading strategies results in organizations adapting quickly to stay ahead of the pack. Steve noted, "Given the rapid evolution of our systems over the past year, we believe more emphasis will be put towards automated workflow. We are seeing a shift towards split trading in which a safe trading system is built into an auto-trading platform, while the human aspect will measure riskier trades."

Automated workflows will help mitigate risk to an extent, while human traders can focus on more high-risk investments.

Following up on market data APIs, we asked what features users should look for in a market data API provider. Steve had key suggestions for evaluating market data APIs: "Users should focus on both the cost and the move towards asynchronicity. Many of our clients focus on a synchronous system, but it's important to keep in mind that the exchanges will continue to make enhancements, and users should be ready to adapt."

Looking toward the future, when asked how emerging technologies like machine learning and AI would impact the products and services offered at Interactive Brokers, Steve noted, "While we have already seen a large uptick in users building their code with ML/AI, we have begun to see systems start taking on a true "advisor" role to make recommendations on code updates. "

With 2024 right around the corner, we asked what the team at Interactive Brokers expects will impact trading the most in the coming year.

Steve added, "The last several years have offered a rocky path for investors as they attempt to navigate rising interest rates, or more precisely, the end of the Fed’s monetary tightening and clarity on whether there will be or will not be a recession and ultimately lower interest rates. Much of the advance in the stock market so far in 2023 can be found in the trail of the so-called Magnificent Seven stocks. However, investors are still trying to find a path of gains from the remainder of the stock market in the face of two significant headwinds: The ongoing threat to a fully functioning US government and ever-higher oil prices, which only add to consumer misery as the Fed raises the cost of borrowing."

As for what users can expect from Interactive Brokers in the coming year, Steve shared a sneak peek into some upcoming product development at IBKR, including its new active trading platform, IBKR Desktop. Similar to Trader Workstation, but with a much more streamlined, faster, and modern user interface.

"The shift to a more modern technology framework enables us to develop new features more quickly and efficiently. We have released the platform to most IBKR clients for an early preview while we continue to develop and roll out more features."