THETRADETECH DAILY THE OFFICIAL NEWSPAPER OF TRADETECH 2022
A big theme for TRADETech is navigating regulatory change . What will be the most impactful regulatory changes for trading ? Regulatory divergence is a major issue as it negatively affects liquidity . It cannot be said any other way . People are frozen by all these regulation changes . If I do this would I be compliant with EU , but noncompliant with Brexit ? And how do I comply with the US ? On top of that , we have had all the sanctions from the Russia and Ukraine conflict since the end of February which has added another layer of compliance in each country . It takes our attention away from trading . We need to understand each change . It takes time to read , to understand , to digest and to adapt yourself . The risk is that we miss an important regulatory change just because there is too much stuff going on as nobody has time to look at everything .
I suspect that the most important regulatory changes are the same for everybody . There are some key themes
“ Look at the adoption of TRACE for fixed income in the US , it significantly reduced market liquidity .”
that are particularly important for trading . I think the consolidated tape will have a massive impact in the way we trade and in the way we digest information . Look at the adoption of TRACE for fixed income in the US , it significantly reduced market liquidity . Trading big sizes in the US became almost impossible . This is something we need to take care to avoid in Europe .
I think CSDR , if it goes through , that also has the possibility to change completely the landscape . The forced buy-ins could mean it would be impossible to short and when you cannot short that means that you can only sell what you have and that means that it ' s just a nightmare to trade . They ' ve been delayed and I hope that there is some reasoning behind that to ensure we avoid them but we don ' t know that it has been totally abandoned . It has only been delayed .
Transparency at any cost is not great because it ends up meaning that people will hide . I have the personal view that whenever you restrict too many things , people will always find a way to do it in a diverted way . Obviously , we could expect divergence between EU and UK on transparency but that would be detrimental for everybody .
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