The chlorine dipped chicken of capital markets

I read Phil Stafford’s great article in the FT yesterday about the continued spat between the UK, Europe and the US over the fate of the vast Euro denominated swaps market in a post-Brexit world. The core issue here is all about where this stuff should be cleared but, yet again, common sense plays second fiddle to short-term economic self-interest and politics. Common sense should... Read More

I’m afraid of Americans

It’s always cool when two different things come together to make you think. That’s exactly what happened on my commute this morning as I listened to David Bowie’s much-underrated album, Earthling. Just as I read another piece about the US election, my ears were treated to the classic track “I’m afraid of Americans”. I will leave you to listen to the song yourself,... Read More

The Dragon chasing its own tail

Few can have missed the carnage roiling Chinese stock markets recently. What’s interesting though is the emerging hubris from Western media that this is due to the intersection of communism and capitalism. The problem, they say, is that the purpose of markets is to allow free and open price discovery. However, they argue, a command economy like China can afford to tamper with... Read More

Backdoor Unbundling

I was relaxing on my way home on the 7.02 from Waterloo last night when I came across Nick Goodway’s excellent article in the London Evening Standard on the impact of unbundling and research procurement. As everyone knows, ESMA wants to make sure that transparency rules the day when it comes to how investment managers use client money, especially when it comes to paying for... Read More

The rising tide in equity trading – who will benefit?

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... Read More

The attraction of OTC clearing

Had an interesting week in the sunshine at the FIA annual conference at Boca Raton, Florida. Not surprisingly, the main topic was the move to bring the worlds of exchange traded and OTC derivatives together. This has been mandated by politicians/regulators on both sides of the Atlantic and will lead to the creation of a multitude of electronic platforms known as SEFs in the US and... Read More

FragINSIGHT – taking a closer look at Asia Pacific

Welcome to the September issue of FragINSIGHT which provides an in-depth study of the Japanese market and an update on developments in Australia, together with our regular analysis of fragmentation across the USA, Canada, Europe and Japan. Also included on page 4 is a useful at-a-glance summary of the global regulatory spectrum. Download your copy here. Thanks to everyone for their... Read More

Welcome to FragINSIGHT

Our team of analysts has come up with a great new information source on fragmentation which we hope you’ll find useful. Having piloted FragINSIGHT last month we had a great response and lots of positive feedback so we decided to publish it on a regular basis – every couple of months to begin with – and make it freely available to all. As well as providing in-depth analysis... Read More

Is it time for smart clearing?

When MiFID first emerged into the mainstream, many of us focussed on developing smart routing systems that could navigate the new fragmented liquidity landscape. Over time, these smart routers have become increasingly sophisticated and now take into account both lit and dark venues and assess them against a dazzling array of metrics. Left behind in the gold rush was the seemingly... Read More

Now with added derivatives

Spent an interesting week in Boca Raton at the FIA’s annual conference which brings together the top executives from the global futures industry to debate what lies ahead. The event had extra spice this year as the recent wave of merger mania in the exchange space has placed a high premium on those venues that have – or that can create – a derivatives capability.... Read More

Deriving Equities Market Share

Last Friday, the 17th September, highlighted again the interrelationship between derivatives and equities in terms of fragmentation. The third Friday of the month is associated with futures and options expiration and so market participants close out positions with a resultant surge in volumes on the primary exchange. You can see this effect clearly in the US, Canada and London as... Read More

Welcome to Global Fragmentation

As you can see, the clever guys at Fidessa Labs have been pretty busy over the summer. They’ve added coverage for the USA, Canada, Japan and the rest of Asia – all in all around 200,000 individual stocks and indices (and growing!) to provide a truly global view of fragmentation. The new site also provides further insight into the world-wide experiment that is going on in... Read More

Trading US Stocks European Style

Few can have missed the announcements from the LSE’s Turquoise and NYSE Arca Europe that they will each soon begin trading US stocks. Both venues will aim to attract the HFT/algo community which will be able to exploit differences in prices between these platforms and their US counterparts. On this point, the Turquoise plan is particularly aggressive as it will allow users to... Read More

Jumping the Queue for Order Flow

A couple of announcements have caught my eye over the past few days. This week saw the launch of a smart routing service called CYCLE from BATS Europe and, last week, I was at a seminar in Stockholm where Turquoise’s Adrian Farnham presented its own liquidity aggregation service – TQ Lens. Both of these announcements highlight how venues are starting to overlap with... Read More

Tick Size Fever

There has been much debate this week around the move to smaller tick sizes as Chi-X, Turquoise and BATS all announced that they will unilaterally reduce tick sizes in the stocks most commonly traded on their platforms. This is in the belief that smaller tick sizes lead to tighter spreads and so will attract even more volume on to these MTFs. This move was taken ahead of the planned... Read More

The Future Shape of Trading

Looking at the FFI today, I was intrigued to see that fragmentation in Paris and Amsterdam went down last week (by nearly 10%) compared to a small increase in London and a relatively unchanged week in Frankfurt. Looking at the data more closely, the difference seems to be that Chi-X and BATS did less volume in Paris and Amsterdam than they have in previous weeks. This is even more... Read More

The Croissant Hypothesis

It was interesting to read Jeremy Grant’s piece in today’s FT about the outage at NYSE Euronext yesterday. Somewhat counter-intuitively volume didn’t move to the MTFs but, according to Jeremy, traders simply “munched on their croissants” whilst the techs fixed the problem. This outage highlighted again the difference between the US and Europe where US volumes are much... Read More