The European Securities and Markets Authority (ESMA) said banks and asset managers based in the European Union should execute most of their share trades inside the bloc in a bid to calm nervous investors post Brexit.
ESMA set out a revised share trading obligation ( STO), that mandates where banks and other users of stock markets must trade EU-listed shares from January if Brussels decides not to allow London’s unfettered access in share trading to continue.
The EU watchdog eased previous guidance enabling investors on the continent to trade sterling-quoted shares of European companies listed in London after the transition period, which is due to end 31 December 2020.
Chris Hollands, head of European and North American sales at TradingScreen.
“This move from ESMA is a sure sign that pragmatism is at last overriding politics when it comes to how equity markets will function post the transition period,” says Chris Hollands, head of European and North American sales at TradingScreen. “If share trading were to fragment further to the detriment or marginalisation of London, it is hard to see how this would be in the interests of either the UK or the EU.”
EU negotiator Michel Barnier.
The EU is keen to bolster its own capital market and reduce reliance on London, which is Europe’s financial hub, handling more than a quarter of the €40bn (£36.3bn) daily market.
However, the revised STO will only apply to a small portion of market trading across the Channel. Fewer than 50 EU-listed shares are traded in sterling in London, accounting for less than 1%of total EU trading, according to Esma.
The markets watchdog added that trading in a non-EU currency could introduce a currency risk for EU investors, as the EU seeks to diminish its reliance on London capital.
ESMA said it had done the “maximum possible” to avoid a clash with Britain over where shares must be traded from January.
Britain has yet to set out its own rules on trading of EU-listed shares but admits that the best solution would be for Brussels to extend full access.
In a statement, the UK Financial Conduct Authority said, “We note ESMA’s latest interpretation of the scope of the EU STO, and we will set out our approach in due course.”
Cboe, Turquoise and Aquis have opened hubs in the EU that are ready to offer euro-denominated trading in EU-listed shares to avoid disruption to clients.
Talks between EU negotiator Michel Barnier and British envoy David Frost were due to wrap up earlier this week but the government has now extended discussions until Wednesday in the hopes of seeking compromises over the main sticking points of a trade deal.
Audris Siow, Head of Institutional Broker Sales, Europe at Virtu Financial speaks to Shanny Basar about her financial technology journey.
What are the most important trends you are seeing in electronic trading? First, technological advancements. Workflow automation and API data analysis have increased efficiency in front office and trading desks by helping manage operational and regulatory risk in a real-time, scalable fashion and are underpinning several cost-cutting measures across investment firms.
Second, the need for greater transparency. Clients want to view, manipulate and analyse data to gain a better understanding of their investment decisions across asset classes.
Third, deep data analytics. Along with Machine Learning and AI techniques, deep data analytics are adapted for the trading frontier which seek to capitalise on technology advancement and its impact in electronic trading.
What differentiates Virtu? At Virtu, we combine global market structure expertise and electronic execution solutions to deliver liquidity whilst creating more efficient and stable markets through our market making activities worldwide. We also develop tech-enabled solutions to streamline those efforts and our global footprint and critical mass ensure that these tools are tested and refined so that, in turn, clients may benefit from effective, scalable and resilient solutions.
As strong advocates for increased transparency, our products and services like the recently launched: Prism Frontier, Open Technology and FX TCA were created to furnish clients with insights to help them see what others cannot.
What are your objectives over the next 12 months?
Covid-19 and Brexit are two factors currently affecting the European market landscape. Our team’s objective is to continue partnering with clients to address their concerns like: sourcing liquidity, managing volatility and risk, and regulatory change and impact. Our multi-prong approach includes new trading tools, alternate sources of liquidity, regular “Virtu U” sessions for knowledge share of trends, products and new skill development.
Personally, working from home has brought to light the essential need for regular contact with people outside of my Covid bubble. As the Winter season nears, it’s important to regularly check in and maintain camaraderie and community. As clichéd as it sounds, we are all in this together.
You wrote your PhD thesis on exchanges. What made you interested in finance?
Whilst law and economics were the two streams I concentrated on at the start of university, a chance encounter is what drove me to specialise in the field of finance. During my honours’ year, I met Professor Michael Aitken, then chair of Capital Markets CRC Limited who offered me a fully sponsored PhD by Smarts Group (SG) at the end of my bachelor’s degree. My PhD thesis on maintaining market integrity, aligned perfectly with SG’s mission and so I traded traditional academia for the hands-on commercial experience of the trading world.
Why did you join Smarts Group? What did you learn from this role? SG had revolutionary market surveillance software which assisted stock exchanges, national regulators and market participants in the real-time detection of market abuse practices.
I was eager to be part of a start-up where I could have opportunities to learn and make a meaningful impact. I took on many roles at SG: business analyst, project/programme manager, commercial director to global head of sales as part of their executive committee. It certainly did not come easy, but it made me more confident in my capabilities. As a subject matter expert, I published, pitched and negotiated with all-male panels, c-suites and board members winning, and losing, several business deals during those eight years. As I matured, I realized that if I remained flexible and adaptable I could create the opportunities I wanted for myself and help chart my own path.
Why did you join ITG? In 2005, I relocated to London to help expand SG’s reach across Europe and the Americas. In 2007, MiFID I swept across Europe and transformed the trading landscape, forcing participants to rely on technology to meet new regulatory obligations. In 2008, I joined ITG because of the firm’s pioneering innovation in electronic trading coupled with an entrepreneurial spirit. Virtu Financial acquired ITG in March 2019.
What has made you successful? Angela Duckworth says it best “Grit is the commitment to finish what you start, to rise from setbacks, to want to improve and succeed, and to undertake sustained and sometimes unpleasant practices in order to do so”.
I could not have been as resilient as I needed to be if it weren’t for my tremendous support network, who in their wisdom, have helped guide me throughout my life and career.
What advice would you give other women who want a career in finance? Be true to yourself, you do not need to be “one of the boys” to succeed. Stay focused and keep your eye on the prize for whatever that may mean to you personally. You will feel like giving up and there will be distractions that will add extra turns and twists on your journey, but gather up what you can learn to make the miles ahead easier or helpful to you. Most importantly adopt a ‘why not?’ mindset, being thrown into the deep end of anything is never pleasant but the skills and confidence you’ll gain are immeasurable and will lead to the opening of more doors – the ones you create or ones that you are invited to walk through.
How can the financial industry increase diversity? What I value most about technology is that it is a leveller – enabling diverse peoples to gain an equal footing for the first time in industrialized history. What’s needed now is more awareness, access to internship and coaching opportunities. At Virtu, we have Winterships (women only internships) and also recently launched two external programs aimed at financially challenged students who participate in a weekly work-based curriculum targeted at rewarding their keen sense of learning. Internally, we also have a robust mentoring program, which I am actively involved in.
The number of female role models across the financial industry is still not where it needs to be – this is not by choice but circumstance.
Recently, my nine-year-old daughter was cast in her school’s production of Peter Pan, as Captain Hook – a role typically reserved for boys. She correctly pointed out that we do not live in Neverland and being a pirate doesn’t equate to being male. Her ‘why not’ attitude in challenging social stereotypes inspires me to constantly create opportunities for every girl who believes there is a bit of Captain Hook in them and to help lead a movement that paves a brighter, equal future for all.
This report analyses the findings of GreySpark’s annual Trends in E-commerce Survey, which – in 2020 – is the firm’s largest survey of this kind to date, with responses from 17 of the top-30 CIBs globally representing, specifically, six Tier I and 11 Tier II CIBs or more than half of the total top-30 CIBs overall.
Angely Yip, Head of Sales and Relationship Management, North Asia at BNP Paribas Securities Services, won Best in Custody at Markets Media Group’s 2020 Women in Finance Asia Awards.
Edna Chan, Director, APAC Head of Cash Equities Middle Office at Citigroup Global Markets Asia, won Best in Operations at Markets Media Group’s 2020 Women in Finance Asia Awards.
Carrie Cheng, Electronic Sales Trader, Global Markets, APAC at BNP Paribas, won Rising Star at Markets Media Group’s 2020 Women in Finance Asia Awards.
By Anthony Belcher, Head of EMEA, ICE Data Services
Anthony Belcher, ICE Data Services
When market volatility spiked dramatically as the COVID-19 pandemic rippled through markets in March and April this year, two big things happened.
First, the amount of message traffic from global exchanges exploded to levels not seen by even the most seasoned trading professionals. Through the ICE Consolidated Feed we tracked a doubling in peak daily message traffic to 276 million, compared with the daily peak in 2019. The main difference from the 2008 financial crisis was the suddenness of the surge. On March 9, Brent crude plummeted 30% as Saudi Arabia announced shock production cuts and the S&P Index fell by 7.6%, triggering circuit breakers.
Second, concerns over the potential for market abuse intensified. A survey from Duff & Phelps found that 32% of industry professionals thought market abuse risk had increased significantly during the pandemic, according to a report in City A.M., a London-based daily financial publication.
Market regulators were quick to issue fresh warnings about the need for participants to tighten up market surveillance, concerned that the shift to working remotely meant keeping tabs on trading activity would be more challenging. The UK’s Financial Conduct Authority issued guidance in May, reminding market participants of their obligations under the European Union’s Market Abuse Regulation (MAR) enacted in 2016.
Now, months on from those tumultuous weeks, the verdict is in on how the MAR performed in the three years since enactment. A report just issued by the European Securities and Markets Authority (ESMA) gave it a clean bill of health, declaring it “fit for purpose”.
That’s good news. But given the wild ride that markets went through earlier this year, it’s worth asking, now that the dust has settled and lessons are being learned, are your surveillance tools also fit for purpose?
Surveillance systems are ultimately, only as good as the data being fed into them. That’s because the market turmoil exposed weaknesses and gaps that caught some market participants unprepared. Was there the data at the right time, in the right format – and crucially, of the level of granularity required – to help ensure participants could fully meet MAR regulatory obligations?
If firms are running surveillance software and there are gaps in the tick data being used – thanks to dropping packets, for instance – then true depth of book isn’t being reflected and users can’t match what’s presented for surveillance purposes with what actually happened. The implications for being able to detect or reveal instances of spoofing, or layering – two practices in regulators line of sight– are obvious.
Meeting surveillance obligations is also about avoiding breaching threshold limits. Given this, being able to capture data every millisecond or less is essential during huge spikes, in order to stay on top of what’s happening.
Capacity is also an issue. Being able to withstand the kind of large message volume levels seen during the pandemic and storing the data are key elements of building the resilience market participants need.Moreover, standards will likely rise around the need for data that is properly normalised and stored in the cloud so it can be easily accessed and re-used.
There is no substitute for having access to a consistent supply of high-quality tick data, accurately time-stamped at the time of trade, in an easy-to-consume format. Broad coverage of exchange and OTC markets is also required, allowing monitoring of trading activity across multiple venues and asset classes
ICE DataVault’s cloud-based store of exchange traded and OTC tick-level data across FX, equities, fixed income and commodities, shows how technology can evolve to offer a rich and deep set of historical data to help market participants and software vendors with their surveillance needs. It helps produce a consistent, unified view of market activity in a language that’s easy to understand and act on. Participants can access the data direct from the cloud, meaning that they don’t have to store the data themselves. The tick data can be easily plugged into surveillance systems and models so firms can comply with regulations.
Being able to rely on these capabilities is at the heart of any effective surveillance system, particularly at a time of heightened regulatory scrutiny. Given what we saw during the pandemic, regulations may well evolve from requiring surveillance to be conducted on a T+1 basis to more real-time. Firms will have to be able to identify new threats and upgrade their systems accordingly.
We already see surveillance system technology evolving, with some firms using automated monitoring of signals and alerts, as well as AI and machine learning to analyze them. Market surveillance vendors rely on level 2 market data from ICE Data Vault to feed their surveillance programmes. A key differentiator here is that the data, taken from multiple sources and in multiple formats, is normalized by ICE to allow AI and machine learning to extract more intelligent insights.
While markets have calmed since earlier this year, the lessons are clear. It’s not just about building the right capability to deal with the next market shock. Market participants must ensure their entire market surveillance capability is fit for purpose in a new world where success will increasingly be defined by being “data fit”.
Key takeaways:
Covid-19 market turmoil exposed gaps in the availability of granular data for helping meet market surveillance regulatory obligations
Having the right data, at the right time, and in the right format, is now increasingly essential to meeting the EU market abuse regulations
There is no substitute for having access to a consistent supply of high-quality historical tick data, accurately time-stamped at the time of trade, in an easy-to-consume format.
Broad coverage of exchange and OTC markets is also required, allowing monitoring of trading activity across multiple venues for a unified view of market activity.
Being able to rely on these capabilities is at the heart of any effective surveillance system, particularly at a time of heightened regulatory scrutiny.
Learn more about ICE Data Services’ deep tick historical data accessible via the cloud here.
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