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Lynn Challenger
GLOBAL HEAD OF TRADING AND ORDER GENERATION , UBS ASSET MANAGEMENT
Global head of trading and order generation at UBS Asset Management , Lynn Challenger , tells Annabel Smith that order flow is increasingly being internalised as buy-side traders continue to grapple with trading costs .
Annabel Smith : What impact does the UK ’ s regulatory divergence from Europe have on the buy-side ? Lynn Challenger : Prior to Brexit , the biggest impact or risk to the buy-side was uncertainty . The lack of regulatory clarity for buy-side trading made it very difficult to predict and prepare for this divergence . I did not know if we were going to have to move traders from London to cover our European clients , or if we could meet the regulatory requirements from our current locations . I could not predict the impact the potential changes would have on liquidity . All that preparation and contingency planning cost time and resources .
Coming out of Brexit , I do expect the EU and UK regulators to follow their own path to a certain degree , at least initially . This is going to place an extra burden on the buy-side to manage two sets of regulations and that cost will only increase as regulations change .
As we talk about this , it is important to note that there is also a permanence to that cost . Take the research unbundling rules as an example . It is important to note the second and third order consequences of this rule change . Along with other factors , this rule change increased the cost basis to asset managers , and it reduced the revenue streams to research firms and broker dealers . Consequently , we also witnessed a reduction in the research coverage and
“ Venues , including exchanges , provide a valuable service , but that service should not come with an entitlement .”
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