17 July 2018
Christian Voigt

Regulation Matters

Christian Voigt - Fidessa

45Posts 318,319Views 0Comments

MiFID II - a catalyst for innovation

21 April 2017  |  6947 views  |  0

Trading in auctions – in contrast to continuous matching – has long been poised to grow under MiFID II, due to the technicalities in the pre-trade transparency regime and its waivers. With the go-live date edging ever-closer, the regulation has become a catalyst for innovation instead of being merely a cost of doing business. Exchanges are currently rolling out new and pioneering trading services that are not only compliant, but that will hopefully also make trading more efficient.

Some exchanges are using auctions in a straightforward setup to execute firm orders. Nasdaq’s Auction on Demand and the Periodic Auctions book offered by Bats are two such examples. The obvious difference between them is in their names – Bats follows a periodic schedule, while Nasdaq will trigger auctions dynamically – but the really interesting differentiator is the priority when allocating the execution volume. While Bats applies the classical logic of price / size / time, Nasdaq offers internal (broker) / size / time. The latter implies that if a broker wants to match two orders (e.g. two different clients or client vs house) then it can do so and no other firm can step into that trade.

Other exchanges are focusing on conditional orders, trying to build larger blocks. These include Turquoise Plato Block Discovery and the Bats Large In Scale Service. Another initiative expected to launch mid-year is Euronext’s Block Trading MTF which aims to build those blocks by providing the capability to proactively solicit the other side of the block trade and so increase the chance of matching.

Obviously all these matching models differ in terms of timeline, scope, legal and technical implementation, but their existence is evidence of our industry’s ability to keep innovating in the face of new regulation. Only today, Plato and Turquoise announced their plans to develop a new Event on Demand mechanism aimed at improving liquidity opportunities in SME securities.

With so much choice on offer it is now up to the market to pick its favourites.

TagsTrade executionRisk & regulation

Comments: (0)

Comment on this story (membership required)

Latest posts from Christian

Joining the fray

28 June 2018  |  4012 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationBrexit

Bracing for Brexit

27 March 2018  |  6342 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationBrexitGroupBanking Regulations

Is the DVC a ban in disguise?

08 March 2018  |  6604 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulationGroupMiFID

Pieces coming together

20 December 2017  |  13861 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationWholesale bankingGroupMiFID

Full steam ahead

07 December 2017  |  4603 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationWholesale bankingGroupMiFID

Christian's profile

job title Senior Regulatory Adviser
location London
member since 2015
Summary profile See full profile »
I'm a Senior Regulatory Adviser at Fidessa and focus on the growing regulatory and functional requirements for multi-asset automated trading systems, supporting our clients across Europe in meeting th...

Christian's expertise

Member since 2015
42 posts0 comments
What Christian reads

Who's commenting on Christian's posts