The TRADE 56 - Page 18

[ A D V E R T O R I A L ] Fireside chat: Embracing new technologies Simon Steward, head of European equity trading at Capital Group, and Mark Pumfrey, head of Liquidnet EMEA, consider how market participants can encourage an innovative and positive trading environment in which they embrace next generation technology to benefit their business, their clients’ experience, and the industry. What are the buy-side’s key challenges, post-MiFID II? Simon Steward: As a large asset manager, liquidity sourcing is par- amount to what our trading desk and execution platform needs to do on a daily basis. The real challenge for us is to ensure that we have a robust and flexible toolkit to take advantage of liquidity opportuni- ties in the market. It’s also about understanding the market micro- structure in a very fragmented, post-MiFID II world. How are you addressing these challenges? SS: Technology is a major part of our strategy. The biggest challenge is identifying the ‘must haves’ against the ‘would be nice to haves’. We have been working on this over the last few years, taking 18 // TheTrade // Summer 2018 an in-house build, rather than buy approach. And while we have not engaged third-party vendors to en- hance our trading platform in the past, this is starting to change. Data and analytics will be crucial. We have a Market Transaction Research Team, which has become fundamental within the global trading group. This team examines all our data, not just at the trader-, account- or fund-level, but also providing us with venue analyt- ics. This enables us to have more enriched conversations with our counterparties and venues around routing practices and outcomes moving forward. By bringing this onto the trading desk, we are looking to empower traders and provide them with the relevant information to validate their decisions, in the overall context of best execution and with respect to MiFID II. How does Liquidnet view the market structure changes and regulatory requirements? Mark Pumfrey: Certain aspects of the market have become more complex and we have seen some unintended consequences. Since the introduction of double volume caps, the systematic inter- naliser (SI) regime has accelerated, having almost doubled from where broker crossing networks were and there is a significant lack of trans- parency around routing practices. The average execution size also remains relatively small, so I think