Q. What are your thoughts on the
increasing levels of regulation faced
by the buy-side?
David Miller: Regulation will
have the biggest effect on
our ability to trade going
forward – how it will affect
liquidity, in particular dark
trading. The increasing cost
of capital will also become a
major factor.
Q. How do you feel the new regulatory
environment, in particular MiFID II,
will affect the trading landscape?
David Miller: A shake up is
inevitable in trading venues.
Dark pools will change
the way they operate, and
I do expect a reduction
in the number of trading
venues available to buy side
traders. There are aspects
of the MiFID II regulation
that I see as an attempt
to move more trade onto
the lit markets, but some
orders and stocks really
don’t benefit from trading
on lit venues. I believe
we will see an increase in
broker intermediated block
trading. As regards small
and mid-cap stocks I do not
believe there is much, or
has ever been much depth
in the lit markets, and we
will continue to utilise more
specialist brokers to source
liquidity. Our concern is that
those brokers may reduce in
number in the future.
Q. Speaking of brokers, how do you
feel the relationship between
the buy-side and the sell-side is
changing? Have you considered
reducing your broker list? And how
do you feel about the challenges
facing the sell-side?
We have
always had an extensive
broker list. With regulation,
empowerment of the
buy-side, automation and
unbundling, their (brokers)
cost models are undoubtedly
under pressure. We very
much hope they survive and
have no plans to reduce
our broker list. Any trader
will always argue for more
counterparties as there is
always the chance that one
specialist that you rarely
speak to will one day have
the other side to a crucial
trade. It is entirely possible
that there may in fact be
additions to our broker list
in the future. New additions
are now judged on the
quality of their flow, and
access to liquidity.
David Miller:
Q. Given the increased regulatory
scrutiny on buy-side firms, what
steps have you taken to handle
due diligence?
Q. How do you choose the electronic
trading services you purchase,
for example algorithms and
other trading tools? Is it the
case that many trading tools are
commoditised?
When it comes
to choosing an electronic
provider, we tend to look
for something different,
something unique aside
from the basic suite
functions, such as VWAP,
DMA and some other
generic tactics which by
definition are the same
across all providers, and
while it is getting harder to
differentiate we have found
it is still possible.
David Miller:
Q. The cost of data has been an
industry talking point for some
years. How do you feel about the
cost of data? Do you think the
regulator should step in and take a
more active role?
The cost
and quality of data will
undoubtedly increase going
forward; we hope that future
regu ][ۈ