Did MiFID II spark a revolution?

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An ‘all-star panel’ provided contrasting views on the pace of change being wrought by regulation and technology in Tuesday morning’s session, ‘Embracing a new era of fixed income’.

Scott Eaton, CEO of Algomi, said the effects of trading protocols and platforms over the 18 months since the revised Markets in Financial Instruments Directive (MiFID II) came into force represented evolution rather than revolution, and certainly “nothing apocalyptic”.

Accepting that the fixed income market is adapting technologies pioneered in other sectors, Gareth Coltman, head of European product management at MarketAxess, insisted that the pace of change is accelerating.

“If this is evolution, it’s happening pretty fast,” he said, adding that growth in the uptake of automated trading options is now “exponential rather than linear”. Coltman did, however, acknowledge that some widely-anticipated changes would remain in the slow lane, suggesting a 10-year time line for a European fixed-income consolidated tape.

Less contentiously, panellists found common cause around the idea that choices for traders are now widening and use of technology and data are assuming a greater role in negotiating those choices.

“Liquidity formation is changing,” said Jonathan Gray, European head of fixed income at Liquidnet, warning that asset managers could miss out on opportunities if not sufficiently alert to fragmentation.

Addressing the session’s subtitle – ‘What new FICC infrastructure should you leverage now to improve workflow efficiency and achieve operational alpha?’ – Nick Robinson, head of trading, Insight Investment, explained the buy-side impact of fragmentation across protocols and providers.

“For fixed income trading desks, the challenge is to identify the ones most relevant to our asset classes and then to establish the most cost-effective means of connectivity. Buy-side desks cannot and probably should not connect to every platform out there,” he said.

Robinson’s view was supported by Daniel Mayston, EMEA, head of electronic trading and market structure at BlackRock, who called on buy-side firms to more fully consider their overall competitive position when investing in their fixed-income trading operations, adding that “superior analytics” will be needed.

“Data is the glue that binds all this together,” said Mayston.

©The DESK 2019

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