In November 1993, when he joined
the industry as a UK equity trader
for Mercury Asset Management, in
some ways it was a different world.
That month, the Maastricht Treaty
took effect, formally establishing the
European Union; in the UK, John Major’s
government passed the Railways Act
1993, which privatised the country’s
railways; in the charts were songs by
Tina Turner, Whitney Houston and Bryan
Adams.
Fast forward to 2016, and buy siders
sometimes express concern about the
rising proportion of automated and
quant flow in the market (as high as 90%,
according to some buy side estimates).
But Squires insists that even in the 1990s,
things were already well underway in
that direction. “It’s definitely true that
10
the rise of HFT is a factor in the more
recent market structure evolution,
but it really first changed a long time
ago – I’m thinking back to 20 years
ago (when order books replaced quote
driven prices).” he said.
So how should the buy-side trader of
today approach the market?
One response might be to withdraw
from the market and trade less,
maximising the use of tools such as dark
pools to minimise market impact and
protect against the ravages of aggressive
predatory HFT. But for Squires, there is
a more optimistic option available: he
believes the buy side should take control
of its own destiny.
What that means in practice is using
technology and making the most of
collaborative efforts such as non-profit
www.buysideintel.com
buy-side and sell-side platforms Plato
in equities and Project Neptune in fixed
income. Both platforms have been jointly
created by banks and asset managers
to address the needs of the buy-side.
They are part of a new wave of initiatives
aimed at addressing the balance, in a
market that has spent years catering
mainly to the demands of quant flow,
arguably at the expense of the longterm investor. Some platforms have
introduced innovations not widely seen
before – notably in the US, where the
venue IEX has introduced “speed bumps”
i.e. random delays in a bid to discourage
HFT and prevent HFTs from gaming or
otherwise exploiting asset managers.
“These platforms have added an
ethical dimension,” said Squires. “They
took action to make the experience
August 2016