Traders on the buy-side have been increasing their efforts to
gain knowledge and understanding
of the algorithms they use in order
to satisfy best execution requirements under MiFID II.
Speaking at The TRADE’s MiFID
II Checklist event in London a panel
discussed how the use of algorithms
has shifted ahead of MiFID II.
“There are more expectations for
the buy-side to have a solid under-
standing of how algorithms work
and how they interact in certain en-
vironments,” said Lloyd Satchwell,
Rob Boardman, CEO at ITG
Europe, agreed and added this ex-
pectation is causing buy-side firms
to change the way they approach
algorithm selection ahead of MiFID
II and develop a greater under-
standing of how they work.
“The buy-side need to certify they
have understanding of algorithms,
but most buy-side firms want to
make sure they are exemplary in
this area… the level of understanding needed has reached a new level
with MiFID II. We have buy-side
looking to become
MiFID II increasing expectations for the buy-side to truly understand their algorithms.
firms seeking advanced training and
consulting services specifically for
algorithms,” Boardman added.
The panel agreed it is difficult
to truly become an expert with so
many algorithmic trading products
in the market, but the impact of
MiFID II in terms of availability of
algorithms will likely see brokers
reduce the amount of products
“Once that number is compressed
the buy-side will be more able to
truly claim to be experts of the algorithms they use,” Boardman said.