Where are the SOR's ?

Having spent the day at Affarsvarldens annual bash "Securities Trading Outlook 2010", with 200+ delegates and an unusually strong lineup of exhibitors I would like to share my thoughts on the topics discussed.

- CCP was introduced successfully, but the old bilateral C&S streams are still there, meaning that most firms are actually stuck with new, costly processes on top of their existing ones!  As post-trade is still a bottleneck in Nordic all-in trading costs, who will be the first to offer an integrated and competetively priced solution covering all four markets ? 

- It was quite clear that the incumbents are lobbying hard to get off-exchange/OTC deals in fixed income and FX on some kind of mandatory clearing platform. This is a huge market with very little transparency - whoever wins the battle and gets to clear these trades are in for a killing

- MTF's has gained a strong foothold in the region and Finland is now the 2nd most fragmented market in Europe - yet most Nordic firms can only access the primaries.  These firms are skating on thin ice as we during the summer noticed that professional customers now ask for BestEx and SOR policies as part of their broker reviews. I strongly believe there are some very stressed desk heads out there trying to get their act together...

- There was talk about a "regulatory revenge", especially on the back of the CESR recommendations that came out this summer, which will affect the market structure and possible forcing more regulation on internalising flow, dark pools etc.

Although there was talk about new dark pools and a forecast that this will reach 6-7% of European trading volumes in 2011 (Miranda from TABB Group), my view is that only a few Nordic clients are active in this space. Most of us in this part of the world are still concentrated on getting the SOR's and venue access up and running. So maybe Dark Trading can be put on the backburner for now and a hot topic at next years conference!