High touch and block
trading in 2019
One major impact of the MiFID II regime was the way it opened
up new electronic processes and alternatives to traditional
bi-lateral high touch and block trading. With banks being
pressured on profitability, it accelerated the juniorisation of
the sell-side desks and the buy side need to scrutinise and
adapt to the new service levels.
EQUITIES
Calling out a few changes, one positive
development to support bi-lateral high touch
trading with Systematic Internalisers (SIs) is the
improved perception of the quality of indication of
interest (IoIs). Aggregating all the buy-side trader
feedback from the local Alpha Trader Forums
(ATFs) in each region in Europe, we can also verify
the pre-MiFID II speculations that the regional
small/mid cap specialists are now increasingly
facing. Competition from global multilateral
trading facilities (MTFs), high touch trading and
seeking optimal partnerships and processes
to access scarce liquidity with minimal market
impact will certainly remain a focal point on the
buy-side’s agenda.
Almost half of the buy side are ready to use
the various Request for Quote (RFQ) services
for equity trading. The RFQ services not only
enable access for the buy side to CRB Systematic
Internalisers (SIs) but also Electronic Liquidity
Providers (ELPs). Anecdotally, a few buyside
traders who attended the 18 th ATF London Equities
meeting have also reported that ELP SIs are
gaining trust among the buy side for deals above
the Large in scale (LIS) thresholds.
From a regulatory perspective we are, at the time
Kristian Karppi (K&KGC), Chris Jackson (Liquidnet), Scott Bradley (LSEG) and Benjamin Stephens (Instinet) at the
7 th annual ATF Global Summit 2019
10
www.buysideintel.com
Spring 2019