A new door opens
The election of Donald Trump as the winner of the US election in November 2016 was an outcome that few had predicted . While Trump does not technically become president until the US Electoral College has voted , there is no doubt that he will be president when Obama leaves office in January .
So , what can Trump ’ s election tell us about financial services ? Trump ’ s statements to the effect that he plans to do away with Dodd-Frank legislation combined with his election victory caused US bank shares to climb . The consequences have yet to be fully revealed , but it does suggest a major shift that will bring a challenge to the global regulatory agenda that has been in place ever since the Pittsburgh G20 summit of 2009 . In its place , we are likely to see an increasing divergence between the United States on the one hand , and Europe on the other – where the European regulators remain focused on implementing MiFID II for January 2018 .
In terms of the buy-side trading desk , the most notable impact may be on relations with the sell side . As Adrian Fitzpatrick , former head of dealing at Kames Capital , notes in our exclusive interview on page 20 , the prime beneficiaries are likely to be US banks , while those in Europe may find themselves struggling to compete in an uneven regulatory playing field . This could potentially translate into more resources available to support the US buy side in terms of inventory and capital , versus lower support in Europe . If so , such a development might perhaps give yet more of a push to the European buy side towards shared utilities and buy-side to buy-side trading tools that can compensate as the sell side adjusts to the burden of regulation .
The other factor is globalisation . Many observers note that Trump ’ s rhetoric about opening the factories in so-called ‘ rustbelt ’ areas of America that have seen jobs outsourced to the Far East are only credible if steps are taken to clamp down on the free movement of goods and capital . Trump has already stated that he plans to scrap the
Trans-Pacific Partnership , as well as the Trans- Atlantic Trade and Investment Partnership . Given the UK ’ s vote in favour of ‘ Brexit ’ from the EU in June , which represented a major rejection of EU-led globalisation , many observers now wait anxiously for upcoming elections in France , Germany and several other countries in 2017 – a theme we explore in this month ’ s issue on page four .
This issue , we also investigate with Credit Suisse ( see page 26 ) how the sell side is adapting and focusing on the latest developments in electronic execution , including predictive analytics and models , as well as changes in preparation for MiFID II . In addition , Mark Pumfrey , CEO EMEA at Liquidnet , tells us how Liquidnet is working with the buy side to find new ways of sourcing liquidity – not least in fixed income , where Liquidnet Fixed Income has just had its first anniversary . In addition , we investigate the buy side ’ s response to the questions posed by Citi in issue 6 , including automation and the role of smart order routing , as well as the potential for collaborative industry projects in various asset classes ( see page 16 ). Also not to be missed is our summary of the winners of the K & KGC brand rankings ( see page 34 ), which were presented at the Buy Sider ’ s Choice Awards at London ’ s Savoy Hotel on 16 November . The awards were given based on votes by the buy side in K & KGC ’ s surveys on equities , fixed income and foreign exchange over the course of 2016 . Each award reflects an outstanding contribution , as voted for by our community of buy-side traders around the globe . The awards are awarded solely on the choice of the buy side , and were intended from the outset to provide an independent , impartial view of which products the buy side values and uses the most .
We hope you enjoy this month ’ s issue , and we look forward to see you at the K & KGC Global Summit on 2 nd February , or at one of our events in Europe , Asia and North America in 2017 . Until then , have a wonderful Christmas holidays and we wish you a very Happy New Year .
Elliott Holley Head of Global Buy-side Research eholley @ kandkgc . com
December 2016 www . buysideintel . com
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