Markets Media and GlobalTrading are pleased to present the shortlist for the 2020 Markets Choice: Women in Finance Asia Awards (WIFAA).

Liesbeth Baudewyn, Systematic Trader, Citadel
Geraldine Buckingham, Senior MD, APAC Chairman, BlackRock
Cheryl Chan, Equity Trader, BlackRock
Susan Chan, MD, Head of Asia and Head of EII and TLL Asia Pacific, BlackRock
Edna Chan, Director, Asia Pac Head of Cash Equities Middle Office, Citi
Cecilia Chan, CIO Fixed Income, Asia Pacific, HSBC Global Asset Management
Tricia Chan, Client Sales Lead, MarketAxess
Michelle Chen, VP, PB Sales, Citi
Carrie Cheng, Trader, BNP Paribas
Rachel Chua, Credit Analyst, MarketAxess
Wanming Du, Head of Index Management, Asia, FTSE Russell
Julie Flack, General Manager, Broadridge Australia
Belinda Fong, Director, Credit Suisse
Niamh Golden, Head of Analytics, APAC, Virtu Finanicial
Lynda Hall, MD, Head of APAC Global Client Services, BlackRock
Nithya Jagannath, DVP-Product Development, SBI Funds Management
Winnie Khattar, Head of Market Structure, BofA
Terecina Kwong, Chief Operating Officer HSBC China, HSBC
Janice Lau, Executive Director, Instinet
Catherine Lee, VP, Investor Sales/Custody Sales, Citi
Natalie Lo, Trader, State Street Global Advisors
Elizabeth Lo, Chief Operating Officer, TX Capital
Varda Pandey, Fixed Income Institutional Sales, Nomura
Mary-Anne Peril, Execution Services, APAC, Virtu Financial
Jasmine Pong, Executive Director, Credit Suisse
LeiLei Qu, Associate, J.P. Morgan Asset Management
Laurence Raby, Chief Risk Officer – Asia Pacific, HSBC Global Asset Management
Ashley Sham, VP, Citi
Rebecca Sin, Head of Equities, Asia, Tradeweb
Susan Soh, Managing Director, Schroder Investment Management
Corrinne Teo, Managing Director, Nomura
Denny Thomas, COO, HSBC Global Asset Management – India, HSBC Global Asset Management
Wei Wang, MD/Head of China – Country Head, BofA
Wendy Wang, Director, HR APAC Business Partner for ETF & Index Investment (EII), Investment Platform and Trading, Liquidity, Lending (TLL), BlackRock
Erica Poon Werkun, MD, Head of APAC Equity Research, Credit Suisse
Jessie Xu, Trader, FMR
Joelle Yap, Director – Client Development & Sales, CME Group
Angely Yip, Head of Sales and Relationship Management, North Asia, BNP Paribas Securities Services

The WIFAA program recognizes the most talented and accomplished women in multiple categories across the business of finance. WIF nominees may come from buy-side and sell-side trading desks, institutional investors, wealth managers, securities exchanges, technology providers, corporate finance, venture capital firms, start-ups — really any area within the financial sector.

Nominees are first put forth by readers of GlobalTrading Journal and MarketsMedia.com, and shortlists and winners are determined by the editorial staffs of the two platforms, in conjunction with the WIF Advisory Board. As with our six- year-old Markets Choice Awards franchise, our methodology in selecting nominees and then winners for Women in Finance is simple yet thorough, and keeps the focus on the important opinions: those of market participants, not ours. 

This year’s WIFAA event will be held virtually on Thursday, September 24 at 4:30PM HKT (9:30AM BST).  Although we are disappointed to not be able to celebrate in person we are equally excited to be able to host a wider audience this year. We are sincerely proud to have the tremendous industry support and an remarkable list of nominations we have received despite of the challenging market conditions. 

Please register here to join our LIVE Virtual ceremony as we come together as the industry to recognize and celebrate the best of the best women in Asian financial markets.

Mark Davies is Co-Founder and CEO of S3, a compliance and trade analytics software company. 

What has it been like leading S3 through COVID-19?

As a software company, it has actually been fairly easy for us. Everybody’s on a VPN [Virtual Private Network] all the time anyway. Obviously we miss the personal interaction, but from a development standpoint, it has been very successful.

On the sales and customer service side, we had expected to see a bit of a slowdown, but we’ve actually had a substantial increase in customer inquiries. This probably has to do with the fact that customers are online more, just as we are. Many people in the New York area, for example, who had an hour or two-hour commute, are working and focused. And there is also a reduction in meetings and other office distractions.

Are you planning a return to the office anytime soon?

No. Not yet.

I don’t know how high the risk is for our employees, or any one employee. But certainly, by putting us all back together in a physical room, if one person gets COVID then it would likely be transmitted. So the idea of going into closed quarters seems like it’s an unnecessary risk right now, accompanied by a not-necessarily-substantial benefit. We’re not manufacturing widgets, we’re a software company; the risk of going back to the office is there, but the benefit doesn’t seem to be there. So we’ll see what the future holds.

What is the latest in S3’s product development?

We are developing a new industry service offering called All-in-One Compliance Solutions.

There are a number of different vendors in the marketplace, offering a number of different compliance solutions around surveillance, best execution, CAT reporting, etc. We got our start in best execution in the Rule 606 phase, where there were several other similar niche players.  And because we have experience dealing with large datasets, we recognize that many of these products and solutions can be integrated into a unified package, to reduce cost and complexity while maintaining quality.

S3 has become known as the premier solution in the industry. We are the best solution out there for a number of different products. We’re not always cheapest, but we are consistently the best. And for clients who are looking for the premier compliance solution where problems are addressed and everything is handled by a single vendor, our solution is appealing.

What’s the latest on SEC Rule 606?

So last week [week of July 27] we hit two major deadlines. The first was the Q2 606(a), which we had a lot of questions about after Q1 606(a). Those questions were answered with the release of Q2 606(a). Then there was also the deadline for the 606(b)(3) look-through piece, which went live as a ‘soft live’. Unlike the 606(a), which is published online, 606(b)(3) is an on-demand report. It was the deadline for delivering those, and since last week we’ve seen an uptick in requests for those 606(b)(3)s.

We’ve been pleased to see that the buy side has started asking for those reports so that they can then support their clients. And I think we’re going to see more demand for those 606(b) reports over the next few months, and with that we’ll have new questions and new information coming from buy-side firms who are trying to understand them. It’s good to see that’s coming to fruition.

What else is coming up that’s important, say for the rest of this year and into 2021?

We’re working on a few things at S3 that we’re going to be launching soon. One is the 606(a) analysis tool, which basically allows for firms to compare their 606s, really to compare all of the industry’s 606(a). This is so they can start putting together patterns and identifying where overflow is going, how much firms are paying for order flow, what firms are receiving what flow, etc. It’s a complete analysis that really provides a complete understanding of what’s going on there, which is the intent of the rule in the first place.

The other big piece that we’re coming out with, is the launch of our after-hours, pre-market hours or extended hours best execution product. This basically allows firms to make sure that they are complying with their best execution obligation during the extended periods, where there have been a couple of high-profile fines and notifications. So our clients will soon be able to be compliant with their best ex obligations in after-hours or pre-market trading.

HEADER PHOTO CREDIT: Alpha Stock Images – http://alphastockimages.com/

More than half of institutional investors, 55%, believe the majority of their environmental, social and governance investments will be in passive products within the next five years, according to research from asset manager Invesco.

Institutional investors currently hold a fifth of their ESG exposure in passive vehicles such as exchange-trades funds, and nearly half intend to increase their passive holdings over the next two years.

Gary Buxton, head of EMEA ETFs and indexed strategies at Invesco, said in a statement: “Investors are often first attracted to ETFs due to their low costs and simplicity, but as we have seen so far this year, ESG ETFs have also been able to deliver on performance objectives.”

More than half of the institutional investors in the survey also believe that ETFs with ESG considerations have the potential for enhanced performance. The survey said only 4% think ESG ETFs would not be able to outperform, while 36% believe there is no connection between ESG and relative performance.

The research also found that 68% of respondents think the COVID-19 pandemic will accelerate the development and take up of ESG investments over the next two years.

Invesco launched the the first sterling corporate bond ETF in Europe that incorporates ESG criteria and in March it listed an ETF which tracks the S&P 500 but improves the index’s ESG profile.

Detlef Glow, head of EMEA research at Lipper, said in a report last month that the industry may be reaching the breaking point where the majority of assets are managed with a sustainability-based approach, rather than in a conventional way, within the next five years.

ESG and ETFs – Two hot topics in the financial industry. Read more about the expectations on these trends in @DetlefGlow's latest Monday Morning Memo: https://t.co/ZH2Y8Va1wf #MondayMM pic.twitter.com/njFaPpZ9y6

— Lipper Leaders – Refinitiv (@LipperLeaders) July 7, 2020

“Since the ETF industry is quite fast in translating investor trends into products, it is not surprising that we have seen a constant stream of new ESG-related products within this product segment,” he added.

He cited the TrackInsight ETF Professional Investors Survey 2020 which found that ESG was the top priority when professional investors were asked which products they would like to see from ETF promoters.

Glow added: “86% of the recipients of the TrackInsight survey want to increase their exposure to ESG ETFs.”

The investors also wanted ESG exposure in more asset classes such as emerging markets and high-yield bonds.

“The demand for more solutions in the area of emerging markets and high-yield bonds is not surprising since bonds are way harder to evaluate from an ESG perspective than equities,” said Glow. “ This is especially true for more exotic markets, as these markets face in general a lack of transparency compared to developed markets.”

As a result he expects the launch of indices covering more exotic markets. However investors also found the lack of transparency and simplicity of ESG indices’ methodologies as the main challenges when investing in ESG ETFs.

“From my point of view, this means that the ETF and index promoters will have to increase their educational efforts and have to work on their communication strategies, as clarity on the criteria used to construct the respective index will be key for the success of the related products,” said Glow.

Net inflows

ESG ETFs listed globally gathered net inflows of $32bn (€27bn) in the first half of this year, more than triple the $9.9bn gathered at the same time in 2019 according to  ETFGI, an independent research and consultancy firm covering trends in the global ETFs/ETPs ecosystem. Assets invested in ESG ETFs and ETPs reached a record $88bn a new record at the end of June.

Products domiciled in Europe accounted for half of the overall ESG assets, followed by the US with 40.5% and Asia Pacific ex Japan with 5.8% of the assets.

ETFGI said that since the launch of the first ESG ETF/ETP in 2002, the number and diversity of products have increased steadily to 369, with 1,019 listings from 89 providers on 31 exchanges in 25 countries. During June, 21 new ESG ETFs/ETPs were launched.

iShares

The first ESG ETF/ETP was launched by iShares, now owned by BlackRock. Last month BlackRock said it had record flows of $11bn into U.S. iShares sustainable ETFs in the first half of this year, more than doubling the previous mark of $5bn for all of 2019.

Armando Senra, head of iShares Americas, said in a statement: “Though the recent pandemic has increased interest in companies with an ability to better manage sustainability-related risk – in particular, the ‘S’ or social issues of ESG – asset flows into U.S. sustainable ETFs have been on a multi-year upward journey. Since 2018, annual industry flows have grown more than 500%, from $2.5bn to $14bn year to date.”

He continued that iShares had launched 23 new sustainable ETFs this year across the U.S., Europe and Canada.

By Chris Hall, Senior Correspondent, Traders Magazine

Retail-led irrational exuberance may or may not explain this week’s S&P 500 record highs, but 2020’s lockdown-inspired home trading explosion has reignited concerns about the uneasy coexistence of retail and institutional players in US equity markets. The conditions that are so attractive to newly active traders are leaving institutions feeling frustrated and restless.

Since March, a combination of zero commissions and an unexpectedly isolated, remotely employed and sports-deprived population has ramped up retail brokerage volumes significantly. Metrics vary, but the phenomenon is epitomized by Silicon Valley newcomer Robinhood, which reported 13 million customers in May, three record trading days in June and a new round of funding this month, pushing its valuation beyond US$11 billion. Overall activity has dipped from the highs of the early lockdown, but volumes are still buoyant at approximately 10 billion shares traded per day.

As a legion of armchair investors work on their stock-picking skills, they may be oblivious to their commission rate, best execution and price improvement advantages over institutional traders. They may also be unconcerned that they are less the customer and more the product in payment-for-order-flow (PFOF) deals that reap handsome revenues for their retail brokers, which sell their orders on to wholesale market-makers. 

Wholesale market makers have seen their equity market share rise from around a quarter to a third in recent quarters, buoyed in no small part by retail flow. “If you don’t have direct access to these liquidity providers, you’re missing out on a lot of the market,” said Larry Tabb, Head of Market Structure Research, Bloomberg Intelligence. “Their aggregation of order flow also means they know the direction in which the retail segment is pushing particular names. Thus they are gaining an advantage from seeing the flows coming through their pipes.”

These flows add value to the wholesale market-makers, but only in the equity options market do they make their way onto exchange, otherwise being crossed internally. 

“In both equities and options, retail investors know their orders will get filled at or inside the National Best Bid and Offer, but the market microstructure of the options market offers more opportunity for price improvement,” said Stino Milito, Co-COO at DASH Financial, a capital markets technology provider. In the options market, the wholesale market-maker will make a price to the retail broker, but the order must be executed via a cross on one of the 11 options exchanges, enabling other market-makers an opportunity to offer price improvement.

“It’s a really good environment for these retail investors. But market bifurcation means large institutions don’t engage with retail flow that often,” said Mett Kinak, Global Head of Systematic Trading and Market Structure at T Rowe Price. 

PFOF arrangements notwithstanding, retail favourites may not hold strong appeal for long-term investors. Hertz, for example, has a strong retail following before filing for Chapter 11 bankruptcy in May. Whilst retail orders have turbocharged US equity trading volumes this year – rising from around seven billion per day prior to the pandemic to peaks of around 19 billion – this extra liquidity was rarely useful to longer-term investors.

“Some may look at volumes and think we’re in a robust and plentiful market, but many institutions would say it’s difficult to find liquidity right now,” said Kinak. “That bifurcation is frustrating because you ideally want a market where everyone can engage with each other. And with all those retail trades being executed via wholesale market-makers, we also need to ask: what’s the effect on price discovery and overall accessible liquidity?” 

Justin Schack, Managing Director at Rosenblatt Securities, shares these concerns, noting that 45% of equity trading volume is currently executed off-exchange, without pre-trade price transparency, rising above 50-60% for some actively-traded names. Regulators have recently focused on reforms aimed at limiting the power of big exchange groups. But Schack argues for a broader approach, harmonizing a long-established two-tier system which imposes fewer regulatory burdens on off-board brokers, lending them a competitive advantage. “Off-exchange operators have a lot more flexibility when it comes to segmenting order flow. That means exchanges are fighting for market share with one arm tied behind their backs,” he said. 

T Rowe Price is among the founders of block crossing venue Luminex and Kinak is keen to encourage the development of additional channels and platforms on which institutions can trade – and post liquidity – in large size. Potentially positive initiatives include IEX’s plans for a new D-Limit order type, aimed at reducing the risk of adverse selection, and CBOE Global Markets’ intention to add a Quote Depletion Protection feature to its Midpoint Discretionary Order. 

Kinak is also engaging with regulators. T Rowe Price has opposed extending Regulation NMS’s Order Protection Rule to sub-100-share round lots due to its potential impact on quote sizes. “If we reduce the protected size from 100 shares, that new level is what the prevailing quote size will become. Quoting in ever smaller increments will just make it harder to trade anything of size,” Kinak explained. 

Further, Kinak notes the impending expansion of the US equity market from 13 exchanges to 16 with some trepidation, due to its likely diluting impact on liquidity. “We’re in favour of policies that aggregate liquidity, for example the removal of unlisted trading privileges and consolidating small-caps in a single venue where interest can be more easily aggregated. We don’t want to be in a position in five years where average trade size in certain stocks has shrunk to just a couple of shares.”