Alex Dalley

While European equity volumes increased in 2024 year-over-year, the longer-term trend is still one of decline. In other correlated asset classes, such as equity options, Europe has also significantly lagged other regions over the last decade. The notion, then, of how to improve European “competitiveness” on the global stage has been a topic of discussion for many years. But this year, with a new European Commission and several new national governments in situ, we might see some meaningful progress towards promoting more efficient and integrated European markets and the removal of barriers to growth.  

The key question that remains unanswered is how this change could be brought about – whether it will be driven by top-down by policy makers, or through market-led innovations and initiatives.  

At Cboe, we firmly stand on the latter side of that argument, because all of our of businesses are pan-European by design, based on the principles of competition, choice and open access, and have been built in partnership with clients. Our ultimate objective, as the operator of pan-European exchanges and clearing houses – whether it be equities, equity options and futures or securities financing transactions – is to create more efficient markets by fostering competitive dynamics and empowering user choice.

Unlocking participation by retail investors

European policymakers are increasingly recognising the benefits of a more engaged retail investor base. 2025 will see further strides across the industry to unlock participation by this community in exchange-traded products as a result of regulatory reforms, a greater emphasis on investor protection and the impending full ban on payment for order flow by 2026.

At Cboe, we’ve witnessed firsthand the benefits of a highly engaged retail community on our US, Canadian, Japanese and Australian exchanges and understand the importance of education and accessibility in this context. Educational programs, like those from Cboe’s Options Institute, which is expanding into Europe this year, are crucial in equipping retail investors with the knowledge and tools to understand and use financial instruments like equity options to manage risk, thereby encouraging their participation.

The onus for improving retail accessibility will fall on exchanges and brokers including neo brokers that are increasingly setting up in Europe with mobile-first apps that make exchange-traded products more attractive to retail investors. On our part, we will continue to lower barriers to entry for investors of all types and, having already implemented a dedicated fee program for retail-attested equity orders, we plan to further strengthen our retail proposition with an offering that appeals directly to retail brokers and the intermediaries executing on their behalf.

Trajectory crossing gathers momentum

The secular growth in systematic and passive investing is projected to rise further in 2025, leading to an increasing proportion of customer flow being transacted via participative and schedule-based algorithms.

It was against this backdrop that Cboe launched Cboe BIDS VWAP-X late last year, a first-of-its-kind venue-based mechanism which allows participants to use conditional indications of interest to match scheduled volume for execution at a forward VWAP price. With similar venue-based trajectory services having gained traction in the US and now familiar to many participants, we believe the timing is right to bring this market model to Europe.

While many brokers have developed their internal trajectory crossing capabilities, venue-based services can complement these efforts in several ways. They can offer a larger pool of liquidity and greater opportunities for matching natural buyers and sellers with a common execution objective and benchmark, introduce a standardised, exchange-regulated VWAP price methodology, and also provide greater transparency with trades reported under discrete but public MIC codes. While we’re disappointed by the recent ESMA proposal that could limit the availability of trajectory crossing within the EU venue ecosystem, to the disadvantage of EU-based investors and brokers, we remain focused on growing the user base of this platform in the UK and continue to engage with regulators as we seek ways to extend the service to include EU equities.

Keeping innovation alive in lit trading

With closing auctions reaching record highs as a proportion of overall trading and continued growth in OTC and other forms of bilateral trading, exchanges and trading venues will need to work hard to maintain a strong value proposition for their lit markets. This will include better highlighting the unique characteristics that each lit book offers by focusing on market quality metrics.

Similarly, periodic auctions are expected to see further adoption after a stellar 2024, accounting for around 10% of continuous trading by the end of the year.

These lit auction venues offer well-established and proven benefits around price determination, price improvement and market impact. The next phase in their evolution will see them move from being largely  midpoint venues to facilitating execution across the spread range.

Decision time for consolidated tape providers

It would be remiss not to mention the consolidated tape! By the end of the year, we’ll know which entity regulators have chosen to operate the EU consolidated tape for equities.

As one of the most significant market infrastructure developments introduced by the EU in many years, this decision carries enormous weight. If well-run and governed, the tape could help attract global capital flows by increasing the visibility of European issuers both within Europe and internationally, while making European markets simpler and more cost-effective to access.

To achieve these goals, the selected provider must possess the necessary technical, operational, and commercial expertise and be aligned with policymakers’ vision and objectives for the tape. Even though Aquis and Cboe decided against participating in the tender process to run the tape through SimpliCT, we remain a key advocate of the initiative and will continue to seek to engage constructively with all efforts to deliver a tape that meets users’ needs.

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Carl Hayes, James Baugh

Leading this effort is Carl Hayes, head of European cash equities, who brings extensive experience from his senior roles at Cowen, Deutsche Bank and HSBC Securities. Since taking on the role last year, Carl has enhanced the firm’s client offering, working alongside James Baugh, managing director and head of European market structure. James’ expertise in liquidity strategy—developed at Cowen, Citi and the London Stock Exchange—helps guide the firm’s approach in a complex trading environment. 

In this interview, Hayes and Baugh discuss priorities, milestones and what’s next for the firm. They offer their insights on navigating liquidity challenges, adapting to regulatory shifts, and helping clients find opportunities in an increasingly fragmented market. 

Carl, what have been your main areas of focus since stepping into your role? 

I took over the role in mid-July, at a particularly crucial and exciting time for us. One of the key milestones during this period was the full launch of our international and US equities trading model in our TD Securities’ Dublin entity. This means we can now execute for continental European clients, something that was previously very limited before the TD Securities acquisition due to complex Brexit regulations.  

We have since rapidly grown our Dublin operations, including onboarding a team of four sales traders to help build out that business. In addition, we’ve hired a prime expert in Dublin to help our North American prime brokerage business as we globalise that platform and extend our synthetic prime solutions offering to our European clients. 

We also work very closely with our colleagues at TD Securities and across TD broadly to offer our clients a true full-service, multi-asset class execution platform. This evolution aligns with the needs of our global institutional clients, and we are well-positioned to deliver on those expectations. 

We are extremely proud of what we have achieved in the last five years – first under Cowen, which later became TD Cowen before our transition to TD Securities in December. Now we’re looking ahead to the next five years, including what we can build to better service our clients to make sure they get the results they need. We are taking a very strategic approach to defining our next steps and we expect multiple exciting announcements over the next 12 months. The foundation is there — it’s proven that we have the right team and expertise in place and now it’s about expanding on that success to deliver even greater value to our clients. 

James, how do you see the European equities market evolving? 

The European equity markets—particularly the secondary markets—are at quite an interesting juncture. On the one hand, we’ve seen an increase in bilateral liquidity provision which has taken a chunk of liquidity out of the public markets. On the other hand, we are starting to see interesting innovations emerge, such as dark midpoint books, periodic auctions and benchmark crossing opportunities. While these innovations bring fresh possibilities, they also exacerbate an already fragmented landscape for publicly addressable liquidity. Net-net, while competition and innovation are a good thing, such as potentially lowering the explicit cost of execution, we also see this undermining execution performance and ultimately leading to an increase in the implicit cost of trading for our institutional clients.   

Layered on top of this are the impending regulatory changes which could positively or negatively impact liquidity dynamics. Notable among these is the introduction of a consolidated tape and the implementation of a new single cap for dark trading in Europe, set to take effect in September. 

When we think about the secondary markets, we also must consider the fact that we remain hostage to the lack of primary issuance in most European markets. Without more inward investment, the velocity of trading in European names is going to remain under some significant pressure. There’s a myriad of reasons why Europe finds itself in this position, but I firmly believe that more transparency and perhaps less fragmentation in the secondary markets, could—alongside several well-documented initiatives in the primary space—help reverse the downward trend as the international community looks for new investment opportunities. 

How are you helping your clients navigate this environment? 

All of this complexity and fragmentation of liquidity makes it difficult for institutional clients to find natural block liquidity and it’s not getting any easier. I’d say that those who partner with brokers who have a deep understanding of liquidity dynamics and take a strategic, thoughtful approach to engaging with available liquidity in real-time will be best positioned to achieve outperformance and reduce implicit trading costs. This should ultimately help drive fund performance. 

TD Securities’ ability to grow our business in Europe has been driven by a clear grasp of these complexities. More significantly, it’s our razor-sharp focus on execution quality aimed at reducing implicit costs of execution that sets us apart. This focus is complemented by a hands-on, highly experienced approach to coverage. Not just across high touch, but across the entire stack, including our electronic, low touch platform. This comprehensive framework has allowed us to tailor execution outcomes to meet individual client objectives.   

It’s important to emphasise that when we talk about implicit versus explicit costs of trading, the implicit costs are far more relevant than the explicit costs of execution when working those larger multi-day institutional block orders. 

We are very excited about being able to offer European clients better execution outcomes and lower costs of execution, and that’s really going to be the area of focus for us over the coming months and years. 

Carl, against this backdrop, what’s next for TD Securities? 

We’ve been on a tremendous growth journey over the last five years. Taking that to the next level, in what is undoubtedly a challenging market, is exciting for all of us. With one of the strongest teams in the industry, we’re exceedingly well-positioned to lead our clients through increasingly complex and volatile equity markets while continuing to deliver best-in-class execution services. 

Looking ahead, our focus is on building our business and continuing to find new ways to help our clients better execute. We have several exciting initiatives in the pipeline to achieve this and further enhance the value we bring. 

As some of the larger global banks consolidate more of the market, our ability to offer clients a genuine alternative whilst maintaining the best-in-class execution we are known for, is a good news story for the market. Being able to take this approach to a much wider audience is a huge opportunity and I’m confident that this business will grow exponentially in the years to come.  

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BestX is a technology company that allows clients to assess the quality of their execution in FX, fixed income, equities and crypto markets. The platform operates as a utility to both buy- and sell-side firms and responds to the demand for increased transparency of costs in the wake of an evolving regulatory environment.  

BestX has continued to evolve across all asset classes, with each asset class having its own unique analytics layer, computing metrics specific to that asset class, eg: VWAP in equities, WMR in FX, far touch in fixed income. The consistent UI framework and functionality allows for common cost metrics to be brought together across all asset classes, for any multi-asset reporting requirements. 

Independent analytics available on BestX allow clients to define, achieve and record a process of best execution. The technology covers the full life cycle of a trade, from pre-trade counterparty selection to post-trade results and automated outlier detection. 

BestX clients can codify their best execution process, making more informed decisions to help improve results. The reporting functionality allows efficient broker and asset owner reviews, which can be run on demand or can be automated. comprehensive transaction cost analysis (TCA) is underpinned by representative and independent market data sources, where BestX consumes and stores over one billion price updates per day – which we believe is the broadest and deepest in the TCA space. 

Could you outline some of the main achievements and milestones from the year? 

BestXecutor: 

We’ve had a number of key enhancements, but to highlight a few: The new tool allows clients to see real time analytics at the point of execution. This includes showing within FXConnect the optimal panel size and counterparty mix for each individual RFQ trade, as well as displaying the best performing algo based on the client preferences. 

This is an industry first in terms of having two-way communication between an EMS and a TCA provider, taking the communication between EMS and TCA to the next step allowing the feedback loop to close by feeding pre-trade information from BestX back into the EMS and automatically selecting the best performing counterparties based on the client’s specific broker list. 

This new functionality enhances the user experience and streamlines clients’ workflows by removing the back and forth currently required between multiple screens and platforms to select the optimal execution method.  

Custodial peer pool: 

As highlighted in our article “The Good, The Bad and The Ugly of Custodian FX” we have recently released the ability for those clients who have opted in to the community data pool to evaluate their trading performance against peer trades within the custody community data pool. When BestX first launched peer analysis, custodian flow was excluded as most files sent to us lacked timestamps.  

As this has now changed for the biggest custodians, we are now sitting on over four million timestamped custodian trades for our clients. Therefore, we are now introducing the data as an additional community data pool (for opted-in clients) which can be filtered and isolated to allow for peer comparison of custody data – whilst excluded from in-house analysis and comparisons. This is to help our clients understand how we are simplifying workflows for oversight and corporate governance, whilst addressing some misconceptions and highlighting existing problems. 

Historically, discussing custody data has always been a challenge due to the lack of transparency in this space. BestX has invested time with numerous custodians over the past few years and, because of this, the data quality has dramatically improved resulting in better oversight and control from the buy-side. In the chart below, we can see that both the average spread and standard deviation of the spread improve along with the time. 

This is again testament to the fact that BestX has become instrumental in driving transparency and collaboration in the FX industry. 

Cost to replace: 

The cost to replace metric was introduced in our last release to quantify the value add of each bank measured as the cost to cover every time they win an RFQ. This will help easily identify the most valuable counterparties.    

Launch of fixed income pre-trade: 

Fixed income TCA is one of the most challenging given the varying levels of liquidity, market data and effective benchmarks. BestX fixed income TCA has one of the deepest data sets available ingesting data from ICE, Refinitiv, MarketAxess, IHS Markit and Tradeweb creating a broad coverage across the cash FI universe.  

Our new pre-trade module now allows clients to submit a target ISIN code with an intended size and direction and subsequently be able to see an expected cost, liquidity score and the competitive liquidity providers. 

In addition, we are now able to produce a list of similar bonds to that target ISIN, which can be configurable by issuer, coupon type, and seniority. 

Equity peer analytics  

BestX launched an equity peer analysis module to add to our existing offering for FX. This would allow users to benchmark their trading performance against their industry peer or across the group of all BestX clients offering insights into execution quality and understanding areas of improvement.  

How do you plan to build on this success? 

Innovation and partnership with our clients around our product development agenda remains the cornerstone of BestX. This includes further analytics and functionality in BestXecutor, to enable clients with enhanced analytics around their decision point to execute a trade as an algo or RFQ, enhancements in our fixed income pre-trade to allow further insights into market liquidity and axes, a fixed income peer pool and equity pre-trade. BestX’s mission continues to be to offer an analytics tool to help clients record, define and achieve best execution and to ultimately help create better outcomes for the world’s investors and the people they serve. 

The post BestX reflects on a landmark year: Innovations in real-time execution analytics, FX transparency, and enhanced market insights appeared first on The TRADE.

There is a misconception that any executing broker can call themselves an outsourced trading “OT” provider. Firms may market their services as being OT, but are often merely offering an agency trading desk to capture commissions for services offered. This service can only be delivered with the proper infrustructure and coverage model in place, with the ability to route orders in a way that fits the fund’s needs. Differentiating the service offerings is becoming very critical for managers.  

In addition to trading, the service delivers a robust coverage model with robust communication with the client about their portfolios, portfolio holdings, sector and market news. The service also delivers operational and technological responsibilities, which reduce a fund’s pre- and post-trade lift as well as the ability to manage the client’s OMS.  It also provides clients with a robust set of reporting capabilities and client service from a settlement perspective. 

What are some lesser-known details that your approach to outsourced trading is solving for? 

Cost efficiency 

The OT function allows managers to leverage the economies of scale that we have built over the last decade – multi-asset class trading infrastructure, technology, and personnel across multiple trading time zones. 

Anonymity and attribution 

A proper OT model allows for complete anonymity of client orders, and is able to get funds the commisison attribution for the trades they want executed with the brokers providing them services. This is especially true for funds who may be large owners of names (e.g. activist) who appreciate that they can enter or exit names without the brokerage community knowing that they are active in the name. 

Access to brokers and liquidity 

With connectivity to hundreds of global brokers and liquidity venues, access to liquidity can be maximised, clients piggyback the benefit of all this market and liquidity access that they would not have themselves, simply because no one fund typically sets up as many liquidity venues or broker relationships that an outsourced trading provider does. 

Working inside a client OMS 

An outsourced firm should offer the ability to manage the client OMS, which includes staging orders, handling pre-trade checks, monitoring all positions, routing to various brokers, consolidating trade files and managing the end of day process.  

Transparency and LP adoption 

The evolving expectations of asset owners and investors are influencing the adoption of outsourced trading. Transparency, best execution, and fiduciary responsibility are now paramount concerns. We are equipped to meet these demands and can provide detailed reporting and analytics that demonstrate compliance with best execution standards. This level of transparency not only satisfies regulatory requirements but also builds trust with investors, enhancing the overall attractiveness of outsourced trading solutions.

Trade cost analysis 

It is especially important for funds to receive a transaction cost analysis (TCA) report at a minimum once a quarter, run by a third party.  This is a fund’s scorecard for execution performance.

Minimising potential conflict 

JonesTrading is an agency-only business. OT providers with proprietary trading desks, internal dark pools, self-clearing broker dealers, internal securities lending desks, and fundamental research offerings all could create potential conflict of interest for the manager.  Knowing that your OT provider is never trading “against you” is peace of mind for most managers. 

Reduced counterparties and FIX lines 

A robust OT provider has built connectivity to hundreds of brokers and venues. The fewer brokers that a fund faces for clearing, the better from a workflow and post-trade perspective. It also helps to minimise counterparty risk concerns for the GP’s and LP’s during their due diligence process.  Outsourced trading also consolidates the settlement process and mitigates operational strain by leveraging the back- and middle-office team to take on those functions.  

Commission management and reporting portal 

OT helps fund managers budget brokers and ensure the right types of orders are going to those brokers, including the prime brokers. Jones has built a proprietary OT portal that provides clients with a depth of information on trading activity, counterparties, commission wallet and best execution.  OT providers are also able to function as a soft dollar aggregator.

What are the benefits of also having a prime brokerage offering?

While many of our OT and PB clients do not overlap, we have found that having a PB offering available can often become a very valuable benefit to the fund manager who is reviewing OT providers. By providing custody and prime brokerage services, the client can gain tremendous amounts of scale from an operational, support, and commercial perspective. 

As PBs have increasing revenue expectations from their clients, the hiring of a separate OT firm can sometimes present an issue for funds who may be looking to separate the two functions. We have the ability to look at the client and deliver a complete solution, if needed. The OT client also opens the door to other firm resources that are typically accessed via the PBs such as capital introductions. Coversely, our PB clients get access to a true OT desk for execution support.

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Redburn Atlantic’s thoughtful approach to the market and experienced trading team mean we have long been recognised as leaders in agency execution. In turn, this has seen us develop into an important trading partner to some of the biggest asset managers globally. Since our integration with Rothschild & Co, we have invested heavily in the US segment of the business, most notably through a merger with Atlantic Equities in 2023. This investment has allowed us to substantially increase our US stock research coverage, as well as enhance our US execution platform via targeted technological enhancements and several important hires.

In doing so, we have created a unique value proposition. The combination of differentiated research (we are one of the few firms on the street who engage in deep dive research), alongside a top tier US high touch trading desk, complemented by an award winning algo suite, has proven extremely valuable to our clients. In our evolution, we have found that customers want the best of both worlds when it comes to execution – access to liquidity alongside market leading client service. By leveraging our deeply experienced team, we have achieved that. 

In the US, we have piloted this by focusing on SMID biotech in both research and trading, and it has paid off in ways that have exceeded our wildest expectations. The number of stocks we have traded has effectively tripled since 2021. In 2024, we nearly doubled US execution revenues year-on-year and have added 70 new accounts for trading, as customers are proactively engaging us to access our research and liquidity. 

What do you expect your biggest drivers of growth to be going forward?

We think that the agency brokerage model is vital to the industry. While larger firms have conflicting priorities, we always focus entirely on improving execution outcomes for our clients. Channeling that energy not only provides a better result to the client in the short term, but also gives us capacity to innovate and drive new ways of trading. For instance, we have launched new tools that incorporate some of the lessons we have gleaned from our European platform regarding liquidity seeking and best practices. Although the two markets are different each with their own idiosyncrasies, there are best practices beneficial to clients. One example is our approach to venues in which we expose pockets of liquidity that we feel are under-utilised by our peers.

Further, expanding the sales and trading team and investing in technology in the US has allowed us to maintain the same premium service and level of innovation while reaching more clients. We have seen an exponential influx of new clients across Europe and the US and expect this trend to continue. As such, this will give us scope to increase our natural block crossing ratio, which currently sits around mid-teens %, above industry norms.

Lastly, alongside the increased flow from our buy-side clients, as the public equity arm of Rothschild & Co., we are also working more with corporates, many of whom have commented on our superior service and execution. This not only allows us to improve the outcomes for the corporates themselves but gives Redburn Atlantic access to more unique liquidity which we can make available to our clients.

How is the trading process changing and what is Redburn Atlantic doing to accommodate this?

The scope and pace of change is challenging. Clients are constantly looking to access more liquidity, while simultaneously reducing costs and avoiding slippage. We are focused on evolving our approach and challenging ourselves to find smart ways to capture liquidity, expand our scope of services, and excel in client support. We are conscious that everyone is under cost pressure, and clients need a well-rounded resource that includes execution quality and service. 

This dynamic presents the challenge as well as the opportunity. On one hand, clients need to automate, which requires an analytical approach and favours the best statistical outcome over a multitude of orders. On the other hand, buy-side traders are facing the challenge of reduced bandwidth but increased expectations of price improvement alpha. Thus, they need to know they can trust Redburn Atlantic as their high touch broker to make thoughtful, intelligent decisions regarding their more difficult orders.

To that end, our algorithmic services team can quickly and efficiently build bespoke algos for those looking to target specific benchmarks, while the high touch team can provide intuition, oversight, and guidance around the more nuanced orders. Finally, our analytics team can offer consultancy for those looking to understand the data in more depth.

Naturally, we are extremely grateful for this award and acknowledgement. Overall, our mission remains to provide firms with the best outcome for their orders. How we achieve that goal continues to evolve and requires the right mix of technology, service, and people. We hope this award shows that we have established an exceptional combination of these three and are best positioned to continue to add value for our clients going forward.

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Last year was a fantastic year for the FlexTrade team globally, welcoming new clients to the buy- and sell-side FlexTrade client community, including the most recently announced Alecta and Liontrust in EMEA and JonesTrading in North America.

To answer the question, at our core, we are an engineering firm uniquely positioned as a provider of both buy- and sell-side technology, which gives us a holistic view of the entire capital markets trading landscape. We’re privately owned, which has been the case for almost three decades, meaning we are unconflicted by our ownership regarding the course we can set. 

The outcome is close collaboration with clients, partners, brokers, and fintech firms in our broader ecosystem to rapidly deliver trading innovation for our customer base and groundbreaking change for the wider industry.

Could you outline some of the main achievements and milestones from the year?

On the buy-side, we’ve worked extensively to address the current trend around direct-to-buy-side connectivity, where liquidity providers of various types create private, curated price streams for the buy-side, who can then engage at their own discretion. We expect this area to continue growing as we move into 2025. 

On the fixed-income side, we’ve continued adding new features to our EMS, FlexFI. This includes launching a new data lake to allow in-house quant analysis of trading data, continuing our work to build deep venue integrations, and offering our clients, like T. Rowe Price Associates Inc., the choice of third-party integrations they need, such as Propellant Digital. Additionally, several new clients successfully implemented FlexFI in 2024 and are live and in production using the solution.

In the FX space, we’ve made further progress in establishing FlexTrade’s digital asset offering. Notably, we’ve integrated with Coinbase Prime, an institutional prime-broker platform for digital and crypto assets. We’ve also announced a strategic partnership with LSEG’s FXall and new FX integrations for clients, such as Tradefeedr’s pre-trade forecast data via API.

On the sell-side, we undertook an award-winning deployment of FlexOMS to JonesTrading, which selected the solution as its full-service technology platform for its equities, electronic trading, and outsourced trading desk business lines.

Additionally, we continued to see the rapid growth of our integrated order and execution management system, FlexONE OEMS, which has been selected globally by several hedge funds and a raft of high-profile fund launches in EMEA, North America, and APAC.

How do you plan to build on this success?

2025 looks like a packed year for the FlexTrade team globally on both the buy- and sell-side, and from our perspective, it is brimming with opportunity across a few different themes.

In the hedge fund space, firms want to do more with less. Sophisticated workflows are not only for the biggest funds anymore. We see demand for systems with robust compliance, allocation, order marking, strong APIs, and automation capabilities to support various trading strategies, as well as the ability to add new pods or asset classes quickly and seamlessly. Our integrated OEMS, FlexONE, is well positioned to capture this demand.

On the sell-side, desks are reviewing technology and looking to adopt solutions that can scale as their business requirements evolve and provide the optionality to add new asset classes or strategies as the market or their client demand dictates.

As a broader theme, industry consolidation and M&A activity across the buy- and sell-side have seen a flurry of potential acquisitions and mergers in focus, and they’re predicted to continue over the coming year. While the integration strategy of firms coming together can differ case by case, deploying a unified, open-architecture, API-rich trading technology layer over acquired and existing solutions can help to provide a single way to face the market. 

The post From strength to strength: Delivering outstanding trading technology appeared first on The TRADE.

Will Fenna

Firstly, it’s important to state just how exciting a time it is for the retail trading and investing landscape. Barclays estimates that £430bn of UK consumer savings is currently held in cash by 13 million individuals – money that could be generating better returns if invested. This is why we feel there is a huge opportunity here for the UK.

If we look at retail investor participation rates in economies around the world, the UK is lagging behind. For example, in the UK only 11% of households directly hold stocks and shares. In comparison, in Sweden it’s around 22% and similarly Australia is about 21%. But we are seeing a growing trend amongst retail investors in the UK to take more ownership of their own financial futures. Many factors have contributed to this, such as rise of financial content on social media and the drive to democratise investing – that is to say accessibility. The technology available to retail investors is making it easier than ever to take charge of your financial future.

This trend is also reflected in the regulatory reforms taking place in the UK right now, which will ultimately benefit the end retail investor and subsequently the wider ecosystem, including the FCA’s expected changes to facilitate retail access to low denomination bonds by simplifying disclosure requirements. More retail participation in UK capital markets means stronger capital markets. When people invest in their own economy, it also gives them a sense of belonging and ownership and more of a say in their economy, which we think is a great thing. We’re always looking at how we can enfranchise retail investors and support retail brokers and the intermediaries too.

How is LSEG both simplifying access and reducing friction for retail investors to access UK capital markets?

When looking at ways to remove barriers for retail brokers and intermediaries, to support them and their clients directly accessing our market, we’ve worked across LSEG to do that. In October 2024, we launched the Retail Broker Order Book Trading Scheme, which waives fees for retail qualifying orders across the London Stock Exchange. Effective 1 January 2025, we will also be waiving market data end user fees for retail investors, allowing them to access real-time market data from both the London Stock Exchange and Turquoise. Having access to the latest, most accurate data available will drive more informed trading by investors in UK securities.

On the post trade side, we’ve also looked at the overall end to end trade lifecycle for retail and announced a Retail Pricing Scheme through LCH’s EquityClear service – wherein we have reduced clearing fees to zero and given various other discounts on flows identified as originating from retail investors, including on eligible ETP/ ETF settlements. This again makes sure that the benefits of the retail enfranchisement are across the entire trading and post-trade lifecycle. All those obstacles we’re addressing are really quite monumental.

We have focused a lot on the equities market, do you see increased retail participation in any other asset classes?

Our initial focus has been on equities, but if we turn our attention to fixed income, there is a similar excitement in the market looking at 2025 and beyond.

Bonds have historically been reserved for wholesale, but this is changing and it’s really swaying in favour of the retail investor. The UK’s Financial Conduct Authority (FCA) have been doing some really good work over the past few years to reform the UK capital markets and are conducting consultations on making it simpler for UK listed companies to issue bonds in smaller denominations so that they are accessible to retail investors too. So, in theory, that means that the average retail investor can actually hold bonds issued by listed companies as part of their wider investment portfolio.

It’s also worth saying that retail investors can already participate in the UK gilt market, but they can now start doing so with smaller denominations. We recognise that many retail investors have an appetite to hold not just government debt, but also corporate debt. Those potential regulatory changes from the FCA could make the corporate bond market a really exciting and attractive landscape for a retail investor.

What next for LSEG and the wider retail and investing landscape?

What we really want to do is build on what we’ve created. We’ve laid some good foundations, including the release of our ‘Rise of Retail’ video series, discussing the work that is being done across the sector to support retail enfranchisement, and has had a positive response from all parts of the industry.

In 2025, we want to make sure that we continue to support retail traders. We want retail to have a say in and care about their domestic markets while relying on a suite of solutions which is strong. Market sentiment is leaning towards further retail inclusion in capital markets, and as a venue we want to keep driving that positive discussion.

The post LSEG’s Will Fenna on the untapped potential of the UK retail market appeared first on The TRADE.

Cboe’s real-time delivery model streamlines the complexity, cost and resource commitment typically required to produce the highest quality risk analytics to inform your trading strategies and risk applications. Cboe’s options analytics can be seamlessly integrated as a data feed into proprietary applications, leveraging valuable internal resources to advance your core business.

Some of the largest hedge funds in the world use Cboe Data Vantage’s customized client solutions to enhance their trading. Cboe’s options analytics also include portfolio analytics for stress testing and scenario analysis, historical data for back testing, tracking volume and volume movement around various events.

Key benefits of Cboe Data Vantage’s options analytics:

• Source of Independent Validation | Risk calculations conducted by an independent provider can offer a higher level of internal controls and facilitate interactions with your prime broker.
• Maintain Data Integrity | Protect sensitive data by integrating a security-level data feed that is fully portfolio agnostic.
• Simplified Technology Integration | Cboe takes a data-enabled approach to source all of its real-time price feeds and reference data, delivering users a complete analytical platform with the simplicity of a single data feed.
• Implied Volatilities and Greeks | Cboe’s options analytics enable users to deliver real-time options analytics (implied volatilities and Greeks) to their retail options and futures customer base to better inform their trading decisions and risk management. Cboe provides broad applicability across the retail options and futures trading and investing community and helps its clients advance their strategy strategies. We have a variety of use studies that serve as an excellent example of how this data can be incorporated into a variety of internal and external uses across the firm.

Other potential uses for Cboe Data Vantage’s options analytics:

• Provide unified professional-level implied volatilities and Greeks to the retail trading community across desktop, mobile and tablet applications
• Add value through access to sophisticated analytic tools such as pre-trade, “what-if” margin impact analysis
• Perform intraday margin calculations for internal risk monitoring

Portfolio and Margin Analytics

Through quantitative and technological expertise, Cboe Data Vantage’s Portfolio and Margin Analytics build upon Options Analytics to offer a real-time, “portfolio aware” solution for risk management. Cboe’s calculation engine is capable of consuming the highest-volume market data feeds in real-time — for example the OPRA feed with peaks around 90 million messages per second — and processing millions of analytical calculations per second.

Historical Options Data

Cboe Data Vantage offers a rich and comprehensive dataset of historical options data, including full tick and analytics data for listed equity options and options on futures, with up to 10 years of history. The compute platform manages more than 3 petabytes of data and offers great depth and granularity. Options data is loaded in real-time and available immediately throughout the day. Cboe’s dataset flexibly supports applications ranging from risk management stress testing to back testing of trading and investment strategies.

Cboe Data Vantage Options Analytics can enhance your trading experience, helping you serve your customers in any market environment. Learn more today.

The post The Cboe Data Vantage Difference appeared first on The TRADE.

Mathis Schulze-Eyssing, Equity & Index Sales at Eurex

“The Home Market Settlement service avails settlement of physical deliveries at Euroclear Belgium, France and the Netherlands,” says Alexandra Roche, Product Manager, Citi. “This eliminates the need to realign positions from the local market to CBF and, in turn, improves settlement efficiency.”

“Given the potential reduction in risk of settlement delays and decrease in settlement costs, Citi was one of the first to offer this service to clients. Our clients have observed increased efficiencies in the settlement process and improved risk management on the back of a decrease in buy-in risk and pilfering risk from their omnibus structure.”

Simplifying vol strategy

Home market settlement promises efficiencies across the European single stock derivatives market. One area where this new structure promises particularly notable efficiencies is option volatility strategies. These involve a trader buying or selling an option while selling or buying the underlying stock.

Termed a ‘delta neutral trade,’ the option’s delta for a call can range from 0 to 1. Traders need to short an equivalent number of stocks to balance the overall option’s delta. The option’s price movements then track the underlying stock movements.

Traditionally, banks have executed this trade using the OTC market through a back-to-back transaction with another broker — receiving the trade’s cash leg after trading the option. However, this strategy creates counterparty risk.

Eurex offers a fully listed alternative for option volatility strategies. Now, traders can execute a standard option and a same-day expiring single stock future as one trade on the venue. As the future expires on the evening of the transaction, the trader can then take delivery of the underlying stock on the same day.

Under the new Home Market Settlement regime, traders can now achieve further efficiencies by directly delivering the underlying stock to their preferred CSD.

Next Steps

The number of member banks in the pipeline for Home Market Settlement is growing, with more and more firms preparing for onboarding to the service in the coming weeks and months.

However, momentum is set to build beyond that, as Eurex plans to expand the service to cover Italy, allowing for physical delivery at its domestic CSD.

As Eurex continues to spread Home Market Settlement across the continent, more traders will reap the benefits of this evolution in market structure.

The post After its successful start, Home Market Settlement prepares for further expansion appeared first on The TRADE.

Michael Rosen, global co-head of prime brokerage and outsourced trading at Marex

The acquisition has benefited us in several significant ways. Marex’s end customer base is distinctly different from what we previously had; they have a strong focus on futures and commodities on a global scale. Their customers are also very interested in trading and receiving support in other asset classes, beyond those they were accustomed to with Marex. By combining our strengths in equities and fixed income trading with Marex’s expertise in futures and commodities, we’ve created a more diversified and comprehensive offering.

Now, with a global footprint that includes outsourced trading for securities, futures, and commodities, we have become a highly attractive partner to a variety of entities. Many of these entities were previously unaware that outsourced trading could meet their needs, especially in the futures and commodities space. While outsourced trading is well-established in equities, it’s less common in futures and commodities, with fixed income falling somewhere in between. This expanded capability positions us to better serve our clients across all these asset classes.

It’s been quite a year for the outsourced trading landscape, what are some of the biggest themes you are seeing?

The themes in outsourced trading have remained fairly consistent over the past few years, but they are becoming more pronounced. Outsourced trading is undoubtedly becoming more global and extending beyond equities into additional asset classes. This globalisation is driven by increasing client demand for services that can support trading across multiple regions and asset classes.

In addition to this, there is a growing acceptance of outsourced trading among a broader range of entities, beyond just hedge funds. We are seeing more interest from institutional investors and corporates, who are recognising the value of outsourcing their trading operations. This shift is contributing to a significant increase in demand, and we are responding by expanding our offerings and geographical reach.

How are you catering for those trends within Marex?

We are continuing to build on our existing strengths while expanding into regions where Marex has established office bases and personnel. This expansion has provided us with access to new relationships and markets, particularly in the Middle East and Asia, where outsourced trading is gaining traction.

We’ve had a presence in Hong Kong for some time, but Marex’s additional offices in Singapore, Australia, and other key locations are now enabling us to develop business in these areas. We’ve been visiting clients and building on the strong relationships that the Marex team has cultivated over the years. This collaboration has been essential in helping us engage more deeply with local clients and offer services tailored to their specific needs.

Singapore, which serves as Marex’s Asian headquarters, will be a major focus going forward. As one of the most evolved financial services and business centres globally, Singapore is key to our efforts, complementing what has already been achieved in Hong Kong. The integration of our expertise in equities with Marex’s established presence in these regions strengthens our ability to deliver comprehensive, global trading solutions.

Just how big can this market get and how do you think the winners on the service provision side will be determined?

There’s no question that the market can become substantially larger, with expectations for continued, steady growth. While it’s difficult to pin down specific global figures, it’s clear that the share of outsourced trading within the overall commission wallet has grown significantly. A few years ago, outsourced trading might have accounted for around 5% of the market, but it’s now industry surveys point to it being at least twice that size.

Looking ahead, it’s not unrealistic to expect outsourced trading to comprise a quarter or even a third of the entire market. This growth will likely be driven by the expansion of services and the ability to cater to an increasingly diverse range of client needs.

Are there any other key attributes of an outsourced trading provider you think are crucial over the next 12 months?

Global coverage is essential. Many of the outsourced mandates we’re receiving involve a hybrid approach—trading the US markets for Asian and European clients, or vice versa. Therefore, a global footprint is crucial for any provider hoping to be a meaningful player in this space.

Additionally, the ability to trade across multiple asset classes is increasingly important. 

At Marex, our approach has always been to ensure that a client has all the information needed to say ‘yes’! It’s about making sure that the market fully understands the scope of our offering and where exactly we can add value. If you’re not clearly communicating your capabilities, you risk losing out on potential opportunities. 

The goal is to maximise our chances of winning every piece of business we’re competing for, and with the combined strengths of Marex, we’re in a stronger position than ever to do just that.

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