Mostly… fixed income and cross product eTrading

April 25, 2007

The Wave

Filed under: etrading, Mifid, Nuts and Bolts — holky @ 7:22 am

There are many reasons to expect an imminent increased uptake of electronic trading –  its pretty much proven technology now so not so much of a perceived risk,  etrading is part of most people’s daily life anyway (tesco shopping, cinema tickets, ebay, and so on..) so it really isnt such a scary concept now to ‘do’ etrading at work, the ‘nintendo kids’ who were the early adopters are growing up into management positions where they influence and define trading firms’ strategy …. and so on.

Additionally I’m sure we all expect a desire to satisfy mifid-induced requirements to cause an additional wave of business moving to electronic channels rather than voice – if only to gain an audit of what was done and why.  That’s not a binary voice up to end Oct then electronic from 1-Nov, but once people have realised just how much easier getting a best execution ‘certificate’ from a platform will be compared to d-i-y, there seems little argument to continue to trade much of the basic flow in unexciting size by voice (er, except if you’re still getting a better price by voice)

Anecdotally I hear people claiming they’ve heard someone say that they’ve heard other people say they expect all flow products to be electronically executed within <cough – mumble – timeframe> – based on some or all of the above.  The Liquidnet research showing that 2/3 of buyside traders expect an increase in the use of electronic trading because of mifid is not perhaps quite so exciting as that, but it does show a general acceptance of electronic trading, and an acceptance in the buyside that the wave of adoption is indeed coming.

Great news for those in or moving to etrading roles maybe.  But are the stats/propoganda that the venues churn out to show how well they are doing actually going to be entirely meaningless from now? How are the venues going to clearly demonstrate the “alpha” increases they are seeing because of what they do well? over and above the “beta” increase in uptake just because it’s time – and they are surfing that wave?

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1 Comment »

  1. Holky, I think we all agree e-Trading is here to stay & growth should be at an increasing rate….but…..there are, specifically in the FI, structural issues in the market that e-Trading will have to overcome.

    There is plenty of room for growth but there is also plenty of room for inovation from Banks, OMS Vendors & ECN’s in order for more & more business to be captured electronically. They need to challenge the buyside to think more about how they transact their business by giving them tools they haven’t even vaguely thought of.

    Speak with many Funds about why they trade that way & they’ll often say “that’s how TradeWeb does it” etc. Many opportunities…..

    Comment by waratah — April 25, 2007 @ 11:16 am


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