final regulatory framework of MiFIDII
there can be no doubt surveillance
and compliance will represent an
increasing cost overhead in the
future of execution. The introduction
of regularly documented process
management and increased investor
/ consultant driven reporting, will
exacerbate a move towards straight
through order management and audited
standard execution workflow. A rise in
automation and predefined routing
will look to support this process within
a documented execution framework
– fixed order handling approach –
stipulated under RTS6 within the MiFIDII
umbrella (Annex I).
October 2016
We have already witnessed increased
smart order and aggregated venue
routing across buyside firms managing
retail, small order and vanilla cash flows.
These fixed benchmark flows (NAV
time-stamp, MOC or IS) lend themselves
to standardised algorithmic and low
impact execution strategies. In the
next generation, we foresee a rising
risk tolerance to automated direct
strategies access (DSA) as desks utilise
EMS technologies to auto-sweep low
risk tolerance orders within a fixed
framework order handling approach.
This is executed via a defined list of
best in class market counterparties and
algorithmic liquidity providers.
www.buysideintel.com
Questions to readers:
1. To what extent will the evolution of
fixed order handling drive increased STP
in execution?
2. How far can EMS smart order
routing develop to minimise manual
intervention in execution?
3. Do traders need to spend more time
developing an ECM liquidity approach
for large in scale block orders?
Citi welcomes reader comments.
Please email responses to
[email protected].
17