I was invited to attend the International Trader Forum in Amsterdam this week. The event was interesting because it brought together senior executives from both the buy-side and sell-side to debate the current state and future direction of our industry.
I came away from the event both excited about all the new opportunities that are emerging, but also with a sense of trepidation too. There were a number of themes that emerged, but there does seem to be real concern about the impending regulation coming in from both sides of the Atlantic. It feels to me that it’s vital that the regulators make sure that they focus on the real issues, and resist the urge to appease the less informed politicians that need to grab the headlines. Take one small example – the impact of dark pool trading on overall price formation (which was discussed at some length this week). If 200 of the finest minds in the industry (plus your humble correspondent) couldn’t agree the level at which dark pool trading has an impact on overall price formation, then what chance do the regulators have?
Another area that got significant airplay was the consolidated tape in Europe. Again, similar issues surface here too as many of the subtleties are misunderstood. It’s not really about publishing a pre trade EBBO (European Best Bid & Offer), but about providing the market with unbiased, clear and consistent information post trade. The issue was summarised neatly by the ever insightful Dr Robert Barnes, MD at UBS, who said that “post-trade transparency is pre-trade transparency for the next trade”.
Overall, however, the twin themes of visibility and the provision of investor choice seemed to be the consensus for resolving the majority of the issues facing the industry. Maybe this is where the regulators need to re-focus their energies and let the market resolve the detail on its own.