The increased usage of FIX Protocol tagging, venue analysis and TCA allow greater post-trade transparency, which provides the correct level of pre-trade transparency without negatively impacting the institutional trader in the process. As trading becomes further divorced from the research process, proving best execution has been delivered will be critical. Full disclosure of execution, dark or lit, will become mandatory.
TABB recommends four positive steps be taken now to deliver greater transparency without impacting liquidity formation, prior to the implementation of any volume cap on the dark. The first is improved harmonisation of data standards and greater mandated reporting to increase robust monitoring and enable more effective supervision. The retention of the equity OTF category is the next step followed by meaningful price improvement, which would require execution of any order benefiting from the waiver at the midpoint between the best bid and offer. Firms must allow the ability to adapt and react as regulations come into force.
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