[ A D V E R T O R I A L ]
The year of the block
David Howson, chief operating officer at Cboe Europe, talks to THE TRADE about
the revolution in block trading and how the firm stays in tune with customer needs.
We’re one year into MiFID II. How
would you assess the first year?
David Howson: Overall, I would say
it was generally a smooth imple-
mentation and I think the market
has adjusted quite well. Market
participants and regulators are
now looking at how the market
has evolved, analysing data and
fine-tuning their strategies and the
regulation where needed.
From an equities market perspec-
tive, block trading has clearly been
one of the winners under MiFID
II. Whilst MiFID II has been a
significant amount of work, par-
ticularly for the buy-side who have
increased responsibilities under the
regulation, many of the new trading
venues such as the Large-in-Scale
(LIS) platforms, periodic auctions
and systematic internalisers are
really designed to help market
participants trade with as minimal
market impact as possible. We view
this as a positive development for
the market overall, particularly the
buy-side community, as innovation
is solving a marketplace challenge.
It’s great to see the marketplace
evolve and transform to meet the
needs of investors.
What is driving the increase in
block trading this year?
DH: With MiFID II’s double-vol-
ume caps on dark pools and
elimination of broker crossing net-
works, there is a reduced number
14 // TheTrade // Winter 2018
“Ultimately, it’s all
about listening to our
customers and working
with them to innovate
and solve marketplace
challenges.”
of venues that provide low market
impact. This really set the stage for
an increased adoption of LIS plat-
forms. However, we’ve seen strong
demand for many years from the
buy-side across Europe for LIS
trading services. As market partic-
ipants take a data-driven approach
to analysing their executions, I
think the data for block trading
venues, such as Cboe LIS, is telling
a positive story of low market im-
pact and larger trade sizes.
Since we launched Cboe LIS two
years ago (December 2016), we’ve
continued to see average trade size
of more than ¤1 million alongside
very strong overall growth. We
set a new record in October this
year with ¤8 billion in notional
traded on the platform, an increase
of nearly 33% over our previous
record month. This is a testament
to the positive response we’ve seen
from our clients who appreciate
the diversified liquidity, protec-
tions from information leakage and
easy-to-use nature of the platform.
Cboe teamed up with BIDS Trading
to launch Cboe LIS. What has been
the biggest benefit to customers of
that partnership?
DH: The BIDS team has been a
fantastic partner and we’ve worked
hard together to grow Cboe LIS.
We’ve really leveraged each oth-
er’s strengths, combining Cboe’s
infrastructure and post-trade
connections in Europe with BIDS’
software and channel distribution
amongst the buy-side community.
The combination of these strengths
has created a seamless workflow
for both buy-side and sell-side
users and I think that has really set