The TRADE TRADETech Daily 2018 - Page 30

THETRADETECH DA I LY making it near impossible to draw any firm or definitive conclusions from the available data sets. Regulators including the UK’s Financial Conduct Authority (FCA) are supposedly keen to dive into the details of orders execut- ed on auctions, prompting speculation that there could be tighter restrictions on how they operate in the future. “With both SIs and periodic auctions, it is quite difficult to figure out what is address- able liquidity and what isn’t,” says Tim Cave, a European market structure analyst at TABB Group. “It’s really up to the industry to come together and standardise how transactions THE OFFICIAL NEWSPAPER OF TRADETECH 2018 “LIS activity doubled last year and we think block trading will continue to grow this year,” adds Rosenblatt’s Puaar. “However, there is generally a natural ceiling to the proportion of trading done in blocks. The increasing number of block-trading venues means it may become even harder to match large trades.” So have volumes moved onto lit venues as MiFID II intended? It would appear not, or at least not yet anyway, and as experts have pointed out, the introduction of DVCs will likely see firms consider the once-feared SIs as a genuine alternative rather than moving volumes onto lit exchanges. There are similarities that can be drawn “I don’t think the buy-side will fully embrace external SIs until they have solid data on performance on those venues.” NEIL BOND, HEAD OF TRADING, ARDEVORA are reported, particularly through SIs, to pro- vide a better understanding of where liquidity is residing. Overall, there hasn’t been a huge shift towards lit venues which was of course the intention of MiFID II, so regulators will be watching this closely.” Ardervora’s Bond also raised doubts over the early buy-side adoption of SIs. “I believe SIs have absorbed the rest of that activity and in- ternal SIs are probably trying to get as much as possible done,” he said. “While larger institu- tions test the waters with external SIs, I don’t think the buy side will fully embrace external SIs until they have solid data on performance on those venues. They are being used, but not widely across the buy side.” Cave adds the DVCs will see buy-side firms taking a closer look at SIs and there should be more execution data ready for analysis. “SIs are a new way of trading for the buy-side and, as with any new venue, they want to able to analyse execution quality before utilising them properly to ensure they are offering best execution,” he says. Teething problems Block trading and LIS venues have certainly thrived in the new, post-MiFID II world. Fidessa’s Top of the Blocks report reveals just how far block trading has come over the past year alone, as the proportion of dark YY B\STXXYHXܙ Hۈ L[X\H\\Y LH[[X\H\YX\܈HYZ[[ X\ \\YYZ[HXܙ K]Yۜق[ۋUQUPRSB]Y[Ӝ[\\Ӝ\H›ٝ[Z\[\[X\YHX\]\X\[[H[YH^H\\H˂]\H\H\\X\[\]\H][[^K\Y\HXو]H[\X]Y\ܝ[[\X[\\[\˜HY\]][ۈ[[[\و[\[[]Y]HZQQRHZY[[\XHBY[KH[\H\\H][۝[B]Y[]ܞH[\H[[HYۚYX[\و[H[\ݙ\Y Y][[ܜ\ۈXH[۝[Y[[[B[[^\\\Y\[Y][œ؛[\\HH^XY ]\[\B[XHY\][Y\\\Z[B\[[Y] []H\Hو]™^X][ۈ[Y\]Z[XH[\ZQQRBX\HY[ݚYH\[[ܘ[[\]K][H\YY]BY[]ܞHY[YH\[YH^\ܙX]YܙX]\X]H[[ܙH[Y\[\]]B]ۙ\˂]Y\[ۜ[XZ[\[܈[YYYH^K\YH[[H[XXH[Y\\[^X][ۈ[YK[H\[X˜]X[ۜ\H\Y۝[YHܛ[Y[X]]H[Z[H]Hو]YB[ X][ۋY^[H\H\[YBYH[H[XH[ܙX\H[X]]K\˜[\[[HZQQRH \^X][ۈ\ܝ\HXYHXX[[K[Y[]YH\H[B\H[^XTPH]\]ZQQRx&\œ[\\[Y[[Y\XZH\\Y\Y[ˈ\۸&]Y[[ۈZQQRRK