[ B I G I N T E R V I E W | A N N L E E P I L E ]
Ann Leepile
Ann Leepile, chief executive of M & G Investments Southern Africa, sits down with CLAUDIA PREECE to give her perspective on how the emerging markets landscape is set to evolve throughout 2026, as well as unpacking buy-side liquidity access, and the institutional impacts of fragmentation and multi-venue trading.
When it comes to fragmentation and multi-venue trading, what are the impacts on institutional investors? Using data from US markets such as Nasdaq, S & P, and Russell, the last three decades have seen two broad strands of evolution.
Firstly, a massive increase in electronic order execution led to a market increasingly dominated by non-bank market makers which accelerated post-GFC. Coinciding with this automation was a big reduction in the tick sizes – also a function of electronic order execution which tends to favour smaller ticket sizes, executed in ever increasing speeds.
These two trends resulted in a market that is predominantly automated with reduced trading costs as spreads tightened – on average from approximately 100bps roundtrip to less than 10bps on most stocks. The progress was stalled by the SEC’ s Regulation NMS( National Market System), as evidenced by the stagnation in bid-offer spreads since 2008.
Specifically, NMS was a regulator response designed to address three things. Firstly, market fragmentation, given the advent of dark pools and fragmented exchanges, it wasn’ t easy to get a unified view of where the best price was to trade Google stock for example.
Market transparency was also an aspect, as dark pools operated by non-bank trading companies have often been accused of extracting too-high economic rents from their market making activities.
Finally price improvement – by introducing a National Best Bid- Offer( NBBO), so a market maker is prohibited from showing clients prices that are worse than the NBBO.
The impact on institutional investors is that fragmentation tends to lead to a more complex trading execution environment, however as we see above, there are other market mechanisms, such as electronic trading, regulatory responses and venue consolidation that can still reduce unit trading costs for clients over time.
All this means that buy-side firms have had to become
" Buy-side firms have had to become increasingly more sophisticated in how they execute – especially in markets that are requiring ever increasing fixed costs just to stay in business."
Issue 87 // thetradenews. com // 23