Event: How to stay competitive in a fragmented market!
Who spoke and who came to the event?
Olof: Speakers were local, Nordic and Global Investment banks, ISV:s and financial regulators gathered around 170 guests for an afternoon packed with information and panels of the impact of fragmented trading in the European markets.
Any surprises?
Olof: Morgan Stanley and UBS shared their experience of fragmentation and how to tackle the issues at hand when going from single venue to multi-venue. A surprise to many of the delegates was that for the large European markets, as much as 50% of the total turnover takes place outside of the primary venue, this is mainly due to a large portion being traded OTC, completely off the orderbooks of both exchanges and MTF’s.
What was the regulator's view of the MTF's?
Olof: Regulators are looking into the way trade reporting takes place, in order to improve quality. The regulators also foresee more cross-border cooperation to ensure efficient processing of trading halts.
What did the customers think of fragmented trading?
Olof: Sophisticated buy-side clients now measure their executions constantly and several speakers claimed that they were satisfied with the business opportunities and lower friction costs fragmented trading creates.
Were there any news on the CCP-issue?
Olof: CCP implementation was discussed with a focus on becoming a DCM or using the service of a GCM, the conclusion was that many of the Nordic participants were unlikely to become DCM:s or GCM, since the lack of economic rationale. Risks on the new CCP:s and the need to “Look under the hood” was also discussed as there is a big difference between risk compliant players and risk managing players. In Europe, we want to avoid competition on margin levels between clearinghouses.
What were the news on the tech side?
Olof: Fidessa and ORC presented off-the shelf solutions for low-latency trading/market-making and fast market access. NeoNet, Morgan Stanley and UBS presented their global solutions and all three offer complete multi-market access, including SOR, Algo capabilities and clearing solutions.
It seems as it was a very interesting day - what were the main conclusion of the messages?
Olof: Nordic players need to understand the dynamic changes in the industry and decide on a strategy in order to stay competitive, this includes the cost / benefit analysis of all parts of the execution, risk management and clearing/settlement side.