[ I N - D E P T H
its own merits. Going forward,
this provides a sort of three-way
feedback mechanism where the
buy-side can evaluate their brokers
and market makers by looking at
aggregate SI statistics. This valu-
able tool will complement TCA and
other capabilities for evaluating
execution quality in equities and
I am genuinely excited to see how
this develops.
Over the course of next year, we
are likely to see an increase in the
number of market makers moving
into the SI regime and an increase
in SI volumes. Then, maybe
towards the end of 2019, I believe
we could see a drop-off in the
number of market makers because
the evaluation framework will be a
lot stronger by that point, making
it easier to identify and weed out
weaker performers.
BS: I would say that with MiFID II
this year, we’ve seen a vast amount
of technical and innovation work
which will further the gap that
exists between different providers.
If I think about the sell-side, those
with nimble technological archi-
tecture that can respond quickly to
changes in the liquidity landscape
or onboard new venues, are more
likely to succeed than those who
can’t keep up or their technology is
too old and will fall by the wayside.
I think that’s likely to continue
as a trend over the course of the
next few years. We’ve seen clients
increasingly applying more quan-
titative and rigorous tests to their
broker selection processes and
their trade distribution processes
for example.
In terms of the bilateral inter-
actions that exist between the
sell-side and the market maker,
the transparency is important, but
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S Y S T E M AT I C
I N T E R N A L I S E R S ]
where I’d like to see more transparency is in the tape.
The consolidated tape was a much desired aspect
we wanted to be included within MiFID II, but as
the regulation became more complex that didn’t
happen. There’s a role to be played for the industry
itself or the regulator to provide a consolidated tape
solution, and what I’d like to see as part of that is
more granularity around the SI prints that take place.
When we trade against an SI we know with which
provider the trade was done, and potentially the type
of liquidity we have interacted with. We will pass
this information back to our clients so they also have
that transparency. What we lack
though is the ability to identify
from the tape generic SI prints
when we aren’t involved in the
trade. Which venue did they take
place on? Is it genuine liquidity
or more of a manual or techni-
cal trade reporting function? A
greater level of granularity would
be beneficial in identifying the
relative location of liquidity, size
of liquidity and the position of the
market as a whole.
MM: From a liquidity perspective,
I would love for ‘perfect’ liquid-
ity solutions to land in my lap,
but in reality that’s never going
to happen. The market structure
is constantly evolving with new
regulation and execution venues
developing constantly. I think that
without the full engagement of the
buy-side, with the sell-side and the
Jonathan Finney
director, European business develop-
ment, Citadel Securities
“I’m pretty comfortable with the tick size regime
being expanded to include SIs.”
JONATHAN FINNEY
venues themselves, it will be much harder and take a
lot longer to drive innovation in the right direction for
the industry. Never before have I witnessed the level
of collaboration between market participants than
over the last couple of years. I only see that developing
further in the years to come.
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