Itiviti introduces Market Structure Strategy group led by Christer Wennerberg
Providing customers with an arsenal of new functionalities and flexibilities is one of the goals of the recently created Market Structure Strategy group at Itiviti. Led by former SEB Bank’s CTO, Christer Wennerberg, and with former Nasdaq OMX’s Head of Development in Stockholm, Magnus Hedin, the team is dedicated to helping Itiviti clients meet regulatory demands and thrive in a new landscape.
With the recent publication of ESMA’s Regulatory Technical Standards, Christer Wennerberg answered questions about MiFID II and what market participants can expect as regulatory requirements become implemented.
“I don’t think anyone can say MiFID II does not include enough. On the contrary, I think that some of the regulation is too detailed, or too extensive, without adding extra value.”
Wennerberg brings up the Double Volume Caps mechanism, which limits trading volume in a given stock on a given venue to 4% of total volume on organized venues, and limits total trading across all venues for a given stock to 8%.
“I believe this will be counterproductive and damage liquidity,” he said.
Another example where he believes regulation may be too restrictive is in addressing firms that engage in algorithmic trading and market making. According to MiFID II, these firms are required to enter into market maker agreements with the operator of the venue.
“This will probably lead to some firms, that post liquidity, ceasing their liquidity provision engagements,” said Wennerberg. “The operational costs in general and the compliance costs will increase significantly. This might lead to consolidation in the market, which was probably not the intention of the regulators.”
While regulation may seem stifling, Wennerberg is optimistic about innovative solutions and technologies on the horizon to help customers navigate this new environment.
“The new regulation landscape will lead to direct effects when participants are adapting to the rules. However, one should not forget the indirect effects of innovation. One example is the BATS new innovative continuous auction, which may reduce the negative effects of the Double Volume Caps mechanism,” said Wennerberg.
He also believes a flexible and high-performance platform will make it possible to adapt to new ways of trading.
“A misconception often heard is that ultra-low latency is only for high-frequency trading. Nothing can be more wrong. Today’s highly fragmented trading, with an ever increasing level of automation, needs extreme performance in order to buy time to make smart decisions. This also stands true for high-touch trading. Apart from flexibility and performance, functionality is key.”
Click here to read the full interview article with Christer Wennerberg.
Execution This is the second part in a series that explores the past, present and future of Order Management Systems (OMS) and the closely related Execution Management Systems (EMS). We cover these trading tools mainly from a sell-side perspective. As financial markets change, new demands on trading technology appear. This includes the functional requirements of the […] February 27, 2018
Risk & Compliance Jim Northey, Senior Vice President Strategy and Research at Itiviti, explores the topic of regulation in a post-globalization environment. In the wake of Brexit and the US election, are we moving away from unified regulatory equivalence to regulatory arbitrage, with single countries taking advantage of regulatory changes to attract market share? February 5, 2018
Execution What sets Itiviti solutions and technology apart from the rest? Itiviti staff explain in their own words. Go to Itiviti solutions January 9, 2018
Risk & Compliance Johannes Frey-Skött, VP Apps Engineering at Itiviti, discusses the data collection and retention challenges presented by MiFID II and tackled by Itiviti Analyst – winner of “Best New Technology Product – Regulatory Reporting” at the FOW International Awards 2017.* MiFID II has far-reaching and multi-faceted implications for European market participants, but if one were to […] December 21, 2017