better for the buy side, even if it was at
the cost of market share. They took a
commercial hit by closing themselves
off to some forms of HFT, when they
could have made a lot of money. I
support an initiative that is willing
to do that. These are the kinds of
platforms that people should want to
trade on.”
AXA Investment Managers has been
heavily involved in the Plato initiative.
Aside from a collaborative trading
utility, the project will use the revenue
generated via its trading to commission
academic research, to identify better
ways of executing trades, lowering
cost and improving quality of data
and processes to support execution.
The aim is to “create a virtuous circle
of improvement for the benefit of all
market participants.”
It is not just the new venues that are of
interest, either. Some existing platforms
have introduced new features targeting
the buy-side, such as Turquoise’s block
discovery service (a platform ultimately
owned by the London Stock Exchange
Group), which was put together
following extensive consultation with
the buy side, and which promises larger
order sizes than the lit markets.
“All these platforms share a theme,”
said Squires. “A community of buy
side and sell side collaborating within
a utility structure. That’s the new
dynamic, where the buy side are more
empowered to determine market
evolution without disintermediating
their brokers .”
AXA Investment Managers sends
orders direct to both IEX and Turquoise.
The choice itself has a bearing on the
relationship between the buy side
and the sell-side, because it effectively
neutralises the smart order routing
aspect of trading execution. While this
is arguably positive in the sense that the
buy side is taking greater control over its
own execution, it also requires a degree
of independent-mindedness by the buy
side, which can be a frustration for those
who feel that other buy-side firms are
dragging their feet.
“It’s strange that the buy side has been
slow to use these kinds of platforms
more as it illustrates a positive choice
in the process of due diligence,” said
Squires. “I want to see more support
August 2016
www.buysideintel.com
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