Obituary: Do-good Chi-X Europe

Young start-ups with highly disruptive business models usually have the luxury of having idealistic mission statements. Just remember Apple Inc. and the promise to “think different” or Google Inc. and their slogan “Don’t be evil”. In my view, Chi-X Europe was directly in that category when, many years ago, Peter Randall was screaming from the rooftops that the newly founded MTF was “better, faster and cheaper”. Unfortunately, business... Read More

Scream if you want to go slower

If you read the blogs, the tweets and the industry press, and attend the conferences, you could be forgiven for believing that all traders of financial instruments are completely consumed by the crazy race to zero. Some commentators say the game will run and run in an ever decreasing battle for nanoseconds. Others say that to simply chase and trade latency is not a viable or scalable business model.  Let’s be completely clear, low latency is very important in electronic... Read More

ESMA Guidelines – turning change into opportunity

Back in December last year you may recall that ESMA issued guidelines on systems and controls in an automated trading environment. The headlines from those guidelines caused a steady ripple of activity across the industry, in the first few months of 2012, as firms reviewed their processes and procedures to ensure compliance by the 1st May deadline or worked to have a plan in place to achieve it. The translations of ESMA’s final guidelines were published on 24th Feb 2012. There... Read More

Keep calm and carry on

The debate around HFT and the impact on financial markets is getting more and more heated. The latest contribution is by Charlie Munger claiming that HFTs “have all the social utility of a bunch or rats admitted to the granary” and that “computer algorithms work a lot like legalised front-running of orders”. Maybe it is about time to ask everyone to keep calm and carry on.  Firstly, skin-deep generalisation across all HFT facilitators is hardly helpful.... Read More

Much ado about nothing

ESMA is currently considering providing guidelines on fee structures. This sounds to me like the regulators are reviewing the maker-taker pricing model. MTFs introduced maker-taker pricing to Europe about four years ago, whereby liquidity providers receive a rebate for executing their passive orders, while liquidity takers will pay a fee for executing aggressive orders. Usually, the aggressive fee is larger than the passive rebate leaving the exchange with a net fee as a source... Read More

NO ENTRY into the Houses of Parliament in a suit of armour, and the MAD directives

While you may think that the title of this blog entry is obviously silly, it serves as a good example of the difference between sensible rules and bad rules. Think about it – can you work out the bad one? “NO ENTRY into the Houses of Parliament in a suit of armour” may sound ridiculous but, if you think about it, it made perfect sense when it was created at a time when knights did walk around in armour and the rule would have been easy to implement and any infringements... Read More

Busy like a bee

ESMA just published an updated version of their work program for 2012. The regulator plans to produce no less than 77 technical standards, technical advice and guidelines and recommendations this year! The newly passed law on short selling will require 18 documents, while EMIR holds the record with 41 expected publications. Enjoy making sense of all that regulation. Luckily, in respect of MiFID II, ESMA only seems to be planning 4 documents for this year: •         ESMA... Read More

Good intentions – bad results

Lobbying  in Brussels can be such a dirty business. Hidden agendas and vested interests are dominating the daily business. Thus, I was very pleased when Finance Watch (a non-industry lobby group, the lobbying arm of Occupy Wall Street, if you will) engaged in their mission to “making finance serve society”. However, the dream of a better world was crushed last week when Finance Watch published their MiFID II position paper called “Investing is not betting”.... Read More

Liquidity and the regulation of markets

Last week’s TradeTech in London included a talk about liquidity by David Lawton, the FSA’s Acting Director, Markets, during which he discussed all the hot potatoes that MiFID II has to offer.  For a change, this was not another piece of 500 millisecond nonsense but included some sensible and well considered arguments. Here are the highlights of his key points: •    Liquidity is not a binary concept – it is multi-dimensional and exists in a spectrum. We can’t,... Read More

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