Buy-side Perspectives Issue 14 Special edition | Page 47

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Optional information sharing for enhanced
collaboration. “Some clients are giving Barclays insight
into the alpha profile of the order at PM level as well as
the characteristics of the flow. Only our clients have full
visibility of the multiple different information sources of
funds, PMs with different signals and alpha profiles. Where
clients have been willing to work closely with us, it has
proven to be a successful methodology to fine-tune the
collaboration and to optimise trading performance.”
“Barclays’ equities growth ambitions are truly global and
we have been investing heavily in products, technology
and people across our platforms in Europe, the US and Asia.
We have great strength in our Prime business which we
are looking to grow and we have a strong balance sheet to
support that objective. Barclays is unique in that we are one of
the few European banks in growth mode right now. “
What is your perception of how the buy side and sell side
mutually benefit from a closer interaction?
“A notable positive recent change has been the improved
closer collaboration between the buy side and sell side
through various industry groups such as AFME, the IA, the
Plato group and buy side community groups like the Alpha
Trader Forum and others that promote an open dialogue. Cross
buy- and sell side collaboration has proven to deliver more
refreshing, mutually beneficial solutions to the industry.”
“Extending the collaborative approach further, some buy
side are also licensing their brokers to help with their
trading process. Pre-MiFID II there was an industry-wide
push where many buy side traders set parameters for the
brokers to harmonise their algorithms. A number of the
more sophisticated buy side desks are now becoming less
prescriptive about their execution experience and are more
comfortable with the idea of involving the sell side in helping
them to achieve their objectives. The sell side can produce
solutions with better outcomes if we are clear on our client’s
objectives and the general profile of the orders.”
“I would like to see the open dialogue continue. There is an
increasing need for harmonisation of objectives in the industry,
especially in the area of regulation, which is great.”
Do you think we have reached a point of stagnating market
structure changes or are we just in the beginning of changes
post MiFID II and the ongoing Brexit negotiations?
The market structure is constantly evolving. We are in a place
where the effects of the regulatory changes over the last 10
months can be felt and there is increasing comfort around this,
however, there is still more the regulators want to achieve.
An example of this is the Investment Firm Review, where the
European legislators have identified sub tick execution of
orders as an issue and adjustments to the SI regime within sub
tick trading have been proposed. It is also likely that we will see
further changes on venue types.
Another example is ESMA’s call for evidence of periodic
auctions. This is currently in a fact-finding phase for the
regulators to understand how and why periodic auctions
evolved the way they have. We could yet see more changes
to our regulation within a relatively short period of time,
compared to how trading regulation operates today.
I think that enough time has passed for market participants to
make a judgement of the evolution of the SI framework and
increasingly more clients are comfortable and understand
what it means to interact with both bank SIs and ELP SIs. There
are already discussions about a preliminary MIFID III timeframe
with 2024 as a new target. So, we are coming into a new
information gathering period for this major revision of the EU
regulation. This is a constantly evolving market.”
“When it comes to the upcoming Brexit challenges for the
market, Barclays has the necessary contingency plans in place
to trade in all jurisdictions to continue serving our clients
regardless of the political outcome.“
Matthew Cousens at the K&KGC ATF Equities London
Global Summit 2019
www.buysideintel.com
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