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FX offering in particular will be
vital as part its strategy to become a
truly global operation and to realise
its ambitions in the Asian markets.
MiFID manifesto
Moving on from the implications
of the merger, many of which will
not be fully realised for some time,
Hemsley is also keen to talk about
the most pressing issue facing all
European firms this year, MiFID II.
“There are several important
angles around MiFID II, firstly that
the volume caps will compromise
dark MTFs and it is evident that
a large number of stock will be
going straight over the 8% total
volume cap in January next year,”
he explains.
Bats already had plans for how
it would deal with MiFID II well
underway prior to news of the CBOE
acquisition. Among the main pillars
of its strategy in this area is its peri-
odic auctions. While these take place
on the lit market, they will prioritise
orders based on size, rather than
time, something the buy-side has
been demanding as a way to facilitate
larger trades while not falling foul of
the dark trading caps.
“The early results are good and
we expect more trading activity
will take place via the auctions as
the broker crossing networks begin
to wind down.”
Auctions have been widely
viewed as one of a number of po-
tential solutions to the dark trading
problem that MiFID II creates,
and Bats’ rivals such as the London
Stock Exchange have also modified
their auction offering to try and
anticipate the changing trading
behaviour expected to come once
MiFID II comes into force in Jan-
uary 2018.
As well as offering auctions Bats is also seeking to
take a share of the increasingly lucrative large-in
scale execution market and compete with the likes of
Liquidnet and ITG with Bats LIS. For this service, Bats
has teamed up with BIDS Trading, a US-based com-
pany that offers block trading using a blotter scraping
mechanism to match large orders together.
However, Hemsley says its own offering is distinct in
the market as it will crucially include the sell-side.
“The crucial thing for us to offer the buy-side
choice, in terms of how they connect and how
they execute.”
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