I got a bit of stick for a recent post where I wrote about the apparent move back into equities trading in January. To be fair, I was only referencing other people’s work but, nevertheless, I was anxiously awaiting the numbers for February. The good news is that volumes in Europe seem to have held up pretty well.
Just as before though, I asked the boffins to strip out the HFT ‘noise’ and just focus on the ‘real’ institutional flow executed by Fidessa’s sell-side clients in Europe. The guys must have had three shredded wheat for breakfast because they went one better and created the chart below which does a great job of showing the change in the value of the flow over the past year.
This chart is based on a value of 1000 for January 2012 and then tracks weekly institutional equity volumes from January through to today. As you can see, executed order flow has risen sharply and the closing value at the end of February was 1484 – a rise of nearly 50% in just 13 months and only 7% away from the high we saw in January. Obviously some of this is explained by general rises in the value of equity assets as broader European indices have risen by about 15%. But, if you’re a European sell-side broker and your volumes aren’t showing the same positive trends, then chances are that someone’s been eating your lunch (or at least eyeing it up anyway).
When we compared this with the picture for retail order flow, the trends were even more dramatic.
You can see that all this talk of the great rotation, higher inflation and negative interest rates has got retail clients thinking about their equity exposures too as the chart shows a 13-month high – a rise of close to 90%. A clear sign that the private investor has got his risk boots firmly strapped on.
It will be interesting to see if these trends continue and so we will publish these charts on a regular basis. If you have any suggestions or would like to see more detail – by sector, for example – then please just let us know.
It would be wonderful if our management team could receive a bar chart or index starting in jan 2012 and going through to the present day on institutional order flow. If it were possible to separate it by Big cap and mid cap the tool would be even more useful and something for which many maybe prepared to pay for. The amount of time that is wasted in all firms debating the correct benchmark off which to assess performance is staggering. Real institutional volumes (rather than retail in our case). Would be as good a benchmark as any. Could i suggest that your innovation group discuss the establishment of the Fidessa Institutional volume index? This will lift your profile, establish a benchmark for all and could be co sponsored to make cash?
Thanks for your positive comments Nick. It is certainly an area that we are devoting more resources too. Especially like the index idea but I guess we will have to call it the Finegold index now :)
I very much like the index idea. Could i ask that thehistory goes back as far as possible – ideally pre 2000.
Thanks for your comment Glenn. We only built the data warehouse that this is all stored in a year ago. We have had a great response though so we will publish the numbers on a regular basis.