THETRADETECH DA I LY
in-depth
THE OFFICIAL NEWSPAPER OF TRADETECH 2018
REGULATION
T. Rowe Price’s trading head
dubious on MiFID II and the
emergence of new venues
GLOBAL HEAD OF SYSTEMATIC TRADING AND MARKET STRUCTURE AT US FIRM THROWS DOUBT ON SYSTEMATIC INTERNAL-
ISERS AND PERIODIC AUCTIONS.
...(continued from front page)
The delayed introduction of the double volume
caps (DVCs) on dark pool trading has meant a
shift in broker behaviour, as some are engaging
with SIs, while using periodic auctions to source
liquidity is more challenging, according to Kinak.
“A lot of brokers are saying now they cannot
source liquidity, but they can provide it and
that’s a big differentiation. Some will do that
very well but others will fail. For me, in terms of
the current winners and losers, agency brokers
have won early on because it’s about sourcing
liquidity and the buy-side is reluctant to use the
SI regime and principle liquidity,” he added.
Kinak did not hold back when addressing the
wider subject of the new regulatory regime,
describing the early days so far under MiFID II as
“a mess”.
“When it comes to MiFID II, who is better
off? I don’t think lit markets would say they are
better off, and the buy-side and asset owners
10
THETRADETECH DAILY
aren’t either. In US markets, you could tell early
on we were going to be a principle driven mar-
ket, like with the SI regime,” he said.
Pointing out that while the new regulation has
increased transparency for asset owners and
fuelled by the increasing popularity of large-in-
scale (LIS) trading venues, a subject that was
discussed across a number of panels throughout
the two-day conference.
“If trading in size you can be anonymous and
“The notion that lit liquidity is the best liquidity is not right, because
there are too many market participants that take information and use
it to their benefit. I urge regulators to speak with the buy-side more.”
MEHMET KINAK, GLOBAL HEAD OF SYSTEMATIC TRADING AND MARKET STRUCTURE, T. ROWE PRICE
managers, which he described as “very ideal”,
Kinak said that the idea of moving markets
to lit venues doesn’t provide asset managers
“anything palpable”.
The emergence of venues such as periodic auc-
tions and SIs have seen the European markets
become more complex and fragmented, further
liquidity is found in the dark space where we
gravitate to early, and then we try the single
dealer pools. Europe previously looked like US
markets where you would gravitate to broker
crossing networks (BCNs) and then to exchang-
es, but now it’s much more complicated. There’s
no sense,” Kinak remarked.