Conference Presentation
The Future of Market Structure - Goldman Sachs 2020 Investor Day
- The firm anticipates global markets evolving into a more globalized and heavily regulated structure characterized by reduced systemic risk, increased transparency, market homogeneity due to passive asset growth (now ~35% of total assets), and rising entry barriers that will likely compress margins.
- To navigate rising complexity and operational risks, the firm is executing technological innovation and scale-building initiatives, including the deployment of the "Pure" logical data model, open-sourcing of the Alloy platform, and replatforming the entire trade lifecycle using on-exchange maker technologies to achieve speeds 300,000 times faster than a blink and 99.9% straight-through processing rates.
- Specific operational milestones include processing ~500 vanilla swaps daily with ~6,500 regulatory checks, handling >1,500 instant message RFQs daily via natural language processing, and expanding the Bond Pricing Engine to generate >6 million updates for 32,000 corporate bonds while GS ALGO makes markets in >15,000 bonds without human intervention.
- Strategic plans involve growing volumes across emerging and developed markets, expanding financing footprints and liquid flow businesses, and utilizing Marquee to fortify internal repo infrastructure and offer bond liquidity via API, with a three-year efficiency target of saving approximately one-third of global markets' current costs.
- The organization aims to capture a larger share of shifting electronic wallets (systematic wallets potentially doubling) by leveraging engineering and quant talent to directly engage clients, thereby improving retention and delivering superior execution quality across swaps, cash formats, and FX commodities.
- The firm plans to reward skilled wholesale participants and deliver explicit value through monetization of solutions, analytics, and capabilities while improving client-measured operational metrics such as confirmation timeliness and straight-through processing rankings.