SellSide

SEF Trading Stumbles to End the Year BuySide

SEF Trading Stumbles to End the Year

https://tabbforum.com/opinions/sef-trading-stumbles-to-end-the-year/ Colby Jenkins TABB Group - "Taking all of this into account, 2019 was nonetheless an up year for SEF trading (Exhibit 4, below). Compared to total notional volume traded two years ago, notional SEF activity has grown by just under 40%, or roughly $58.15 trillion, since 2017 – primarily driven by the IRD market. With a significant slowdown in IRD SEF trading over the past quarter, though, 2020 is already shaping up to be a year of further departure from the SEF market status-quo."
From too Big to Fail, to too Large to Survive Automation

From too Big to Fail, to too Large to Survive

https://tabbforum.com/opinions/from-too-big-to-fail-to-too-large-to-survive/ Larry Tabb TABB Group - "The trading business is being captured by electronic market makers/liquidity providers, and the short-term risk transfer business is being poached by shorter-term quantitative and specialized hedge funds." ... "If the business isn’t shuttered, it becomes almost impossible to rip out the core processing systems, order management platforms, algorithmic infrastructures, reporting lines and business planning processes to achieve the cost structure and agility needed to succeed. Unfortunately, for most firms, that is what is needed."
The Strange Economics of Exchange Management Data

The Strange Economics of Exchange Management

https://tabbforum.com/opinions/the-strange-economics-of-exchange-management/ Kurt Dew Northeastern University - "The markets are evolving toward a two trading-space system. The first: exchanges trading SEC-regulated publicly held corporate equity and debt; the second: exchanges trading more generic non-SEC-regulated markets." ... "There is a growing opportunity for a new blockbuster exchange to seize the volume going to generic futures and OTC instruments by a single exchange with spot trading capability. But to be successful, this spot market must be at least as efficient as the existing futures markets, reducing trading costs to a minimum, thereby attracting volume."
From Beginning to ‘N’: What the History of Regulations from Reg ATS to Form ATS-N Tells Us About the Future of Dark Pools Data

From Beginning to ‘N’: What the History of Regulations from Reg ATS to Form ATS-N Tells Us About the Future of Dark Pools

https://tabbforum.com/opinions/from-beginning-to-n-what-the-history-of-regulations-from-reg-ats-to-form-ats-n-tells-us-about-the-future-of-dark-pools/ Craig Viani Liquidnet - "Based on the intensification of regulatory scrutiny in the past few years, it’s probable that the number of US dark venues will remain stagnant for a period of time. Additionally, with future rule changes such as proposed amendments to Rule 605 requiring greater granular statistical measures of execution quality17, we believe that it’s likely the competitive landscape will remain in a narrow band for the coming years."
Revised SEC Rule 606 Shines a Light on Order Routing Disclosures Data

Revised SEC Rule 606 Shines a Light on Order Routing Disclosures

https://tabbforum.com/opinions/revised-sec-rule-606-shines-a-light-on-order-routing-disclosures/ Ivy Schmerken FlexTrade Systems - "Currently, an OMS has the primary level information, and gets the last market where the order was executed, including whether it added or removed liquidity, and it can calculate execution costs based on known fees, explained Chu. “But, if those algo providers routed the order to another venue or exchange, and that gets routed out further, we don’t have that secondary or third-level or fourth-level of information today,” said Chu. “There’s no structure to get that information today,” he said. Gathering the information on these downstream orders has been a challenge, especially if brokers utilize more than one OMS or have an EMS, said Chu. “If our clients use us solely for their trading, we have all the data in the OMS, so we would provide the data over to the 606 [data] vendor,” said Chu. “When some clients use another OMS or EMS, we have no visibility.” "
SIX’s Bid to Acquire BME will Ultimately Prevail, Creating a New Pan-European Exchange Data

SIX’s Bid to Acquire BME will Ultimately Prevail, Creating a New Pan-European Exchange

https://tabbforum.com/opinions/sixs-bid-to-acquire-bme-will-ultimately-prevail-creating-a-new-pan-european-exchange/ David Tabaka - Burton-Taylor International Consulting "A combination of the two exchange operators would reach Pro Forma 2019 revenues totaling $1.2 billion, with the largest revenue impact in the Trading, Clearing & Settlement segment, increasing SIX’s existing revenues by more than 35% as it brings equity, fixed income, and derivatives trading revenue to the combined entity. The deal would also further bolster SIX’s information services efforts that include data sold by SIX’s Securities & Exchanges unit as well as data, indices and other services from SIX’s Financial Information unit. The acquisition would give SIX a new data footprint in the EU, and significantly expand its ability to offer Spanish datasets and index products."