Liquid Refreshment – 20 May 2010
First Published Friday, 21st May 2010 02:05 pm from Fidessa : Fidessa
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Firstly, thanks to Olof Neiglick and the title="Burgundy" href="http://www.burgundy.se/home"
target="_blank">Burgundy team for hosting an
target="_blank">seminar on the state of liquidity
fragmentation in the Nordics earlier this week. The sessions
included presentations from brokers, vendors and clearers and
helped highlight a number of issues facing the broking community
as a whole and particularly in terms of dealing with fragmented
liquidity. The first point is that, in terms of SOR,
it's now a question of "how" to
implement it rather than "if". Robert Barnes,
pool, made an excellent case for how large brokers can
take the pain away in terms of cost and complexity by allowing
other brokers to reuse their smart technology to access the
myriad pools of liquidity that now exist across the lit-dark
spectrum. This makes perfect sense for some firms provided that
they can demonstrate their own value-add on the trading food
chain and can be clear about whether they are trading with or
through these larger brokers. Other technology vendors made the
alternative case for buying in third party technology. This is
probably the only other viable alternative as the market is
changing so fast that the "roll your own"
option is simply unaffordable for all but the largest players.
The sentiment, however, seemed to be that any such third party
option needs to fully respect the entire (fragmented) workflow
involved and not just chop orders up and ping them out to
On this point, the chaps
target="_blank">EURO STOXX 50 Index into the title="Fragulate SX5E"
target="_blank">Fragulator (thanks to Malcolm Ford
for his useful suggestion on this). If this is any kind of proxy
as to how other national indices are going to end up then life is
going to get a lot more complicated for us all. I started trying
to add up all the different potential paths an order might take
(including clearing and settlement) over the 35 different venues
but soon gave up - might make a good idea for a
Anyway, it was a great event in
Copenhagen and the tour and dinner at the nearby Carlsberg
Brewery proved an ideal opportunity to refresh ourselves on a
similarly dazzling array of liquidity.