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Unbundling requirements under MiFID II will force brokers to specialise in either research or trade execution, according to a panel of experts at Trade Tech.
The panel agreed the move will have a positive impact on
the industry as brokers will increasingly demonstrate trade
performance and invest specifically in those services.
“You need to be an expert in either research or execution
because brokers will no longer be paid for both services. You
can’t be trading with people to pay for their research anymore, there must be a clear differentiation,” said the head of
investment services at Man Group, Alison Hollingshead.
Duncan Higgins, head of electronic sales for EMEA at
ITG, explained to delegates specialising in research or execution is a good thing as it forces brokers to compete based
purely on the quality of execution.
The ability to compete for more business, demonstrate
your value and be rewarded for that is good for everyone
because suddenly you’re competing based on performance
of execution,” he said.
Robin Strong, managing director at Westminster Research
Associates, agreed the separation will “squeeze the middle
Referring to a survey carried out by Westminster Research
Associates, Strong added the industry is “cutting it fine” in
terms of being compliant with unbundling by the January
The survey revealed over 10% of the industry believes they
will be MiFID II compliant by December this year, just one
month before the implementation date.
“The reality is we’re in a situation that is unprecedented
in the industry. MiFID II is such a major piece of legislation and with a lack of clarity from regulators and a lack
of understanding among market participants, the state of
Panel agrees specialisation is a positive
move for the industry as it forces competi-
tion based purely on quality of execution.
Brokers ‘must specialise
in research or execution’
A start-up is targeting Bloomberg Terminal
users with a rival product which is free to use.
Level Trading Field - launched in April 2016 -
was founded by a group of former traders who
say costs for using Bloomberg and Thomson
Reuters services are unreasonably high.
It offers a platform with web-based communication channels, research tools and quantitative analysis applications. The platform
replicates everything Bloomberg and Thomson
Reuters offers, but is free to access.
While the service is free and a number of
applications on the platform are free, other
functions like the job board are sponsored.
Speaking to The TRADE, chief executive
officer at Level Trading Field, Lanre Sarumi ex-
plained: “Our product is more like an operating
system, it doesn’t force things into categories
and works the same way as a computer with
icon and applications on the desktop.”
He added the firm’s aim is “to let market
participants know there is a platform out there
that can do everything Bloomberg Terminal can
do, but with little or no cost.”
A recent report found user numbers for
Bloomberg Terminals declined for the sec-
ond time in the company’s history in 2016.
“Bloomberg Terminal users are declining, but
it’s much bigger than that. Firms are cutting
back on subscriptions to save costs and they
have access to the data already without realising it,” Sarumi added.
Speaking at the time of the launch of the
platform, Sarumi explained the firm is working
to ‘level the trading field’ in the futures, options and equities markets, “to provide traders
with fast access to market data, profession-al-grade technology and applications that lead
to better trading decisions.”
Bloomberg Terminal users
with free service