SOR headache continues....
First Published Monday, 14 December 2009 from Automated Trader
Knight Capital’s Kee-Meng Tan draws on his experience from the US and predicts that it’s only a matter of time before traders are completely comfortable using alternative venues when the LSE is down.
Kee-Meng, how did the LSE outage affect you? How do you think this will affect the MTF community in the future?
I think there was minor impact in terms of our business because we continued to trade on the MTFs. As time goes on I think the MTFs will continue to gain significantly more credibility as well. While trading continued on the MTFs certainly, volumes and spreads were lower and wider. The first time the LSE went down, people didn’t know how to handle it, but this time around there were people, including ourselves, who had since the last outage, reprogrammed their systems to be able to continue to trade when the primaries went down. I suspect there were not as many firms as the MTFs would have liked, with technology in this area still lagging at the moment.
People are free to take their orders and trade them elsewhere but in many cases it is their SORs which are probably not configured to do that. The truth is this is not just an LSE issue. We are talking about the LSE because they experienced the most recent significant outage within the primary exchanges. The real question here is "to what extent have the MTFs become an alternative source of price discovery to the primary exchanges”. It is only when the primaries "fail" that we really start to analyze th...The rest of this Article is only available to Paid Subscribers
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