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Two-Thirds of US, UK, European Buy-Side Traders Seek Natural Blocks, According to TABB Research 

October 21, 2015

Market Watch

Interviewing 43 global heads of trading at hedge funds and asset management and private wealth firm in the US, UK and Europe to establish how they plan to adjust to the latest MiFID proposals and whether regulators will succeed in bringing back the block, TABB Group learned 67% prefer finding natural blocks than relying on a choice of venue, broker or strategy. Yet only a third are moving from schedule-based trading back to blocks, says Rebecca Healey, a TABB Group consulting analyst who wrote “Bringing Back the Block.” While many claim to want to trade blocks, it remains elusive, often a problem of perception versus reality, she adds.

According to Healey, continued overall decline in the use of risk capital means buy-side firms will have to improve information flows rather than rely on their broker to deliver natural business. The ability to receive and consume accurate indications of interest (IOIs), as well as measure and monitor the value individual brokers provide, occurs at a time when most are highly skeptical of the information they receive. There is also pressure with inclusion of IOIs as possible market manipulation under the European Market Abuse Regulation (MAR).

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