the main themes right now is the
systematic internaliser (SI) regime
and how it will interact with existing market structures.
“It is unclear how liquidity will
move between marketplaces,”
he says. “Where will liquidity go
in 2018? Will SIs be allowed to
interact with each other? What
will the role of electronic liquidity
providers be? The growth in block
trading is already visible, will this
continue to gain market share? It
is an enormous challenge.”
Illiquidity and volatility
Fixed income is even more com-
plex than equities, says Boess.
Liquidity provision is likely to be
more opaque come next year when
the rules finally go live.
“Writing different transparency
rules for liquid and illiquid bonds
does not make much sense in
my view, actually the whole idea
seems a little artificial. While there
are liquid and less liquid market
segments in fixed income different
regulatory treatment and multiple
execution venues will not make
trading more efficient.”
And then there is best execution.
A good idea in theory, the specifics
of this remain obfuscated.
“How do you define and prove
best execution?” he says. “The
fact that ESMA was not overly
prescriptive in that area was a very
good decision, but the buy-side
now has to fill the broad term in
practice. We are comfortable that
“It is unclear how liquidity will move between