Buy-side Perspectives Issue 14 Special edition | Page 18

Equity trading - planning for the future by reflecting on
recent events
The new European equities market structure has given
the buy side a wide variety of choice for block trading
methodologies. Even if there are further adjustments
expected, at least it seems like the regulatory changes
have contributed to a more distributed, varied market
structure with more choice. The latest newcomer seems
to have various services that use the RFQ protocol which
has been met by various levels of excitement among the
buy side.
The diligent buy side who are analysing the details, in
an attempt to make sense of SI routing practices, are
still facing challenges with double prints in addition to
the lack of Fix tag harmonisation. It is therefore hard to
evaluate the trading performance between venue types
and trading methodologies as achieving a like for like
comparison is challenging. With new types of trading
services being introduced on the market, a few buy
2019 - IN STRATEGIC PARTNERSHIP WITH:
side are signing direct agreements with ELPs for cash
equity trading in addition to ETFs. The vast majority of
the buy side are taking a more conservative approach
letting their SIs determine the conditions that are
appropriate. With a general concentration of flow among
major brokers, we also identified which regional brokers
still play a role in small/mid cap trading.
The buy side have compared notes and discussed their
experiences as K&KGC presented their detailed research
of the buy side’s use of various TCA systems and
performance benchmarks.
Pre-trade analytic tools are mainly applicable for sub
10% ADV trades and broker relationships are key for
any larger or less liquid trades. The buy-side heads of
trading are challenged in their internal process reviewing
‘outliers’ and a practical approach is needed by the firm’s
trade oversight committee members. ESMA’s initiative