Electronic trading players are balancing a daunting number of high-impact forces in today's environment. From liquidity center formation, to preparation for rigid transparency rules, to managing the impact of high-frequency trading, there is no shortage of common challenges for industry executives to address.

Last week an unusual meeting of leaders from electronic trading was held in New York to take on these and other topics in a roundtable format. What made it unusual was that the group was comprised of a representative cross-section of the industry as a whole. Firms of varying sizes, business executives from different asset classes, technology strategists, and infrastructure and service providers convened at the Electronic Trading Innovation Council. The group compared notes on disruptive trends in the industry. The group discussion yielded many insights, including:

-- Liquidity Centers: Liquidity center formation is ad hoc and, in some arenas, overdone. Council members acknowledge the value of innovative approaches to accessing flow, but redundant approaches in low-margin areas will struggle. Meanwhile, facilities in newer, higher margin areas are volume-challenged. A hot topic: what should the role of the NYSE be?

-- Tech Trumps Fragmentation: Technology will eventually reverse the current trend of liquidity fragmentation. There continues to be a proliferation of systems running pieces of various processes that comprise the global fabric of electronic trading. Technical advances will drive the efficiencies and economies of scale that will usher in a period of consolidation.

-- Transparency: Transparency is a customer imperative, not just regulatory imperative. There is increased demand for exposure of a range of information, from execution venues, to counterparties, to how algos execute. Underlying this demand is increasingly sophisticated approaches to transaction cost analysis.

-- Reinventing the Wheel?: Asset classes face substantially different conditions. From the disproportionately onerous regulatory impact of Dodd Frank on electronic derivatives trading, to the slow (relative to equities) evolution of fixed income electronic trading, asset classes have unique challenges. One unfortunate thing they have in common is that too often the evolving asset class is looking to reinvent electronic models instead of leveraging existing best of breed.

-- Commoditization: Cost reduction and commoditization trends remain strong. While it was noted that there is still value in block trading and there are still desks making the case that they generate alpha, the automation trend is inexorable. Traditional trading functions are giving way to systems that reduce cost, and firms' value to the market is being expressed in terms of technology, not people, that performs a function.

The discussions at the Electronic Trading Innovation Council were informative because while the topics were of common interest, the participants came at them from ranging points of view. A wide range of firms included BNY Mellon, Citi, Credit Suisse, Lazard Freres', Morgan Stanley, Nomura, State Street, and UBS. Asset classes included equities, fixed income, and derivatives. Enablers of electronic trading included Cisco, Equinix, Savvis and Tervela. Industry pioneers like Jim Leman and Steve Silberstein, and technology visionaries like Aron Dutta and Sherwin Uretsky from Cisco rounded out a group that was a microcosm of electronic trading as a whole.

If there is one thing this group agreed on it was the need for a more holistic approach, by both firms and the industry at large, to addressing these disruptive trends. The days of isolated, independent profit centers "doing their thing" are gone. The need for integrated business, technology, compliance, and risk approaches is urgent. And the development of strategies to address this need is in its infancy.

About the Author: Julio Gomez, is co-founder of Innovation Councils and previously founded Gomez Markets, a strategy consulting firm specializing in financial services technology. Prior to Gomez Markets he was Global Head of Research at Financial Insights/IDC, providing extensive research and consulting services to users and providers of financial industry technology. Mr. Gomez is widely known as the founder and CEO of Gomez, Inc., the de facto standard for measuring Internet services quality, was sold to Compuware. He is a frequent keynote speaker on market trends and strategic initiatives in financial technology, and has developed content for major financial services technology events. Mr. Gomez is a graduate of Princeton University.