THETRADETECH DA I LY
to then eventually flow back to me. It hasn’t
prevented us from doing business, and those
partnerships that we enjoyed before are still
there and still fruitful, but it just takes that
little bit longer to do business on occasion.”
Increased costs
Not only is execution taking longer, it is also
more expensive. According to a study from
the brokerage and analytics division at Virtu
Financial, following a spike in volatility and
news
THE OFFICIAL NEWSPAPER OF TRADETECH 2020
wider spreads in March, trading costs as
captured by its ‘Global Peer Universe’ spiked
significantly, with every region seeing a large
increase in the first quarter this year.
Virtu found that US trading costs surged
42% in the first quarter compared to the
quarter prior, with March costs increasing to
a high of -63.7 bps. At the same time, trading
costs in the UK surged 76% during the period,
55.2% in Europe – excluding the UK, and 78%
“Getting complacent is not an option. If you
haven’t been monitoring and reporting on
your activity you will be in trouble.”
MATT SMITH, CEO OF STEELEYE
in Asia Pacific – excluding Japan.
Ben Springett, head of European electronic
and program trading at Jefferies, tells The
TRADE that the shift to remote working
combined with unprecedented levels of
market volatility has driven a number of
changes to the trading landscape, including in
costs of trading.
During the most volatile periods, data
from Jefferies shows a rise in the cost of
execution by more than three times, despite
an explosion of liquidity. Spreads more
than tripled while volatility more than
quintupled, and liquidity at the touch was
down by a third, suggesting a reduction in
market maker activity. Springett categorises
the challenges with remote working into
being infrastructure-related, and the other