THETRADETECH DAILY
SPONSORED ARTICLE
Optiver ’ s role in the evolving equity trading landscape
Advances in technology are giving institutional asset managers new avenues for sourcing liquidity . By establishing direct connections to market makers , institutions can access differentiated liquidity as a complement to banks ’ agency execution services . Here , three buy-side traders discuss the changing nature of equity trading and the role that firms like Optiver play within this evolving landscape .
Pablo Fernández Gómez
How has your approach to execution evolved over recent years ? Pablo Fernández Gómez , head trader , BBVA : Since Mifid II , we have divided our business into high-touch and low-touch . We only give intermediaries that support us in our high-touch business access to our low-touch business . We think it creates a virtuous circle , where we reward those who make an effort to innovate . We find that banks are increasingly focused on agency execution , via algorithms , which reduces their execution risk to zero .
Eric Heleine , head of buy-side trading desk ,
Groupama : Our flows are skewed between very high-touch activities and very lowtouch activities . That ' s why we ' ve developed a lot of automation capabilities to optimise execution and reduce the duration of the low-touch flows . This includes algo wheels with a combination of multi-execution channels that sweep liquidity before going to the lit market in order to reduce our foot print .
Jay Hockey , senior equity trader , Schroders : Whilst our appetite for risk has remained consistent in recent years , we ’ ve significantly grown our use of electronic trading with the use of algo wheels and modelled broker selection ( data driven ), thus providing significant efficiencies and automation of workflows . Bank risk is essential for us when contemplating our trading strategy . We see that banks have broadened their IOI offering , with many providing interactive and actionable risk liquidity into platforms that we can trade against in a more electronic , low-touch manner .
What are the broader technological trends driving your approach and what do you look for in an execution partner ? Fernández : In any industry , you need to evolve and keep up with change to survive . We ’ re living in a “ rise of the machines ” era . In trading , we believe this means hybrid intermediaries that combine human talent with state-of-art technology are the best positioned . We see many in the industry that are still tied to the pre-Mifid II broker-list model and therefore miss liquidity opportunities . Trading is no longer just a people ' s business that relies solely on a trusted relationship with your sales support . New technologies and new ways of managing risk books are emerging and we like to value talent .
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