29 July 2014

Fidessa Fragmentation Index

Steve Grob - Fidessa

95 | posts 290,421 | views 3 | comments

The rising tide in equity trading - who will benefit?

07 February 2013  |  1805 views  |  0

Been reading quite a bit lately about how good old-fashioned equities are finding their way back into investors' favour. And this time it is more than just the indices that are on the move, volume traded is going up too. In many ways, volume or consideration is a more useful indicator of the general health of the trading industry and the US has reported record influxes into managed market funds and ETFs recently. A similar trend is being widely reported across Europe too.

So, if this is the start of a real resurgence, who will the winners be? They say a rising tide lifts all boats and so I guess we can expect all market participants to prosper to some degree. But is this “the right sort” of liquidity? Are the original participants returning to the market or is it just more HFT chasing its own tail?

The charts below might help answer this. The first looks at total European equities traded by consideration and it certainly seems to show the beginnings of a trend.  

The second chart is based on data from the Fidessa network. Because it focuses on its core client base of asset managers and sell-side brokers, it effectively strips out HFT and instead represents "traditional" order flow.

The same upward trend is clear and so there are definite grounds for cautious optimism. But the real winners will be those that have been using the downturn to rethink their businesses. Firms that have simply reduced capacity may find that they are ill-equipped to take advantage of this new sea of liquidity. More so, as whatever happens to volumes, the game is different now. The proliferation of venues and order types, combined with on-going regulatory churn, demands a different trading workflow. This needs to be based either on scale or specialisation and the firms that achieve this will get the lion's share of the new liquidity.

TagsTrade execution

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from Steve

Build vs Buy becomes Rent vs Collaborate

12 June 2014  |  1742 views  |  0  |  Recommends 0 TagsTrade executionPost-trade & ops

Maybe markets are unfair, but are they rigged?

02 April 2014  |  1475 views  |  3  |  Recommends 0 TagsTrade execution

The Twilight Zone

05 February 2014  |  1844 views  |  1  |  Recommends 0 TagsTrade executionRisk & regulation

The Watchman's Rattle - financial regulation in 2014

22 January 2014  |  1199 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation

Ready, SEF, go

14 January 2014  |  1573 views  |  0  |  Recommends 0 TagsTrade executionRisk & regulation
name

Steve Grob

job title

Director of Group Strategy

company name

Fidessa

member since

2009

location

London

Summary profile See full profile »
I am responsible for strategic development at Fidessa. This includes the development of new geogr...

Steve's expertise

What Steve reads
Steve writes about

Who is commenting on Steve's posts

Ketharaman Swaminathan
Tom Saar
Peter Fredriksson
Erik Bogaerts