This piece was originally published in The Financial Times.
As we enter the seventh year of a post-financial crisis world, it is hard to think of an area that has not suffered a knee-jerk reaction from politicians and regulators.
Certainly the scale of the subprime mortgage crisis, strained bank balance sheets and indebted sovereigns demanded urgent action. But as reform has been sprayed indiscriminately around the industry, solutions have been found to problems that did not exist.
A little over a week ago, the French Autorite des Marches Financiers (“AMF”) published guidance on certain notification requirements relating to the use of algorithmic strategies for trading in certain French securities. The notification requirement comes into force on 1st January, 2015.
Based on conversations we held with the AMF late last week, we understand that they consider this new rule to be a precursor to the algorithmic trading strategy notification requirements included in the overhaul of the European Union’s Markets in Financial Instruments Directive (“MiFID II”). Whilst we do not doubt the AMF’s resolve to impose an algorithmic trading strategy notification requirement on market participants as part of the MiFID II package, we query if other national regulators such as the U.K.’s Financial Conduct Authority will use their powers under MiFID II to follow a similar approach to the AMF’s.
Please find this article referenced in the Wall Street Journal.
Responding to many client requests, the FX team at ITG Analytics reviewed trade data surrounding the WM/Reuters London Closing Spot Rate Service (“the fix”). By observing the factors that influence trading costs using ITG TCA® for FX’s rich quote data we found trade patterns that were unique. Consistent with academic literature,we show that volume and volatility around the fix spikes and the spread costs tighten temporarily. In addition, we see mean reversion of the FX rates on days when there is substantial price pressure shortly prior to the fix. Our analysis does not prove the allegations of manipulation brought about by some market participants.
This piece was originally published in Best Execution magazine.
On the 14th January the European Parliament and Council of Ministers ﬁnally agreed a new directive to update rules for markets in ﬁnancial instruments (MiFID II). Rob Boardman, CEO of ITG Europe asks whether it was worth the wait?
On January 14th, Michel Barnier, the European Commissioner in charge of financial services in the European Union (EU) welcomed the agreement in principle reached on rule changes to the Markets in Financial Instruments Directive (MiFID II/ MiFIR). Barnier declared that although the speed of implementation was not ambitious enough, the agreement still represented “a key step towards establishing a safer, more open and more responsible financial system and restoring investor confidence in the wake of the financial crisis” (see: http://europa.eu/rapid/press-release_MEMO-14-15_en.htm?locale=en).
With the German Federal Elections occurring Sunday, European investors are curious about what impact the elections may have on the European regulatory environment. In this version of The Blotter, ITG's European General Counsel, J.P. Urrutia, summarizes some of the expected results and potential impacts, highlighting Germany's importance to regional policy.
In this edition of The Blotter, Juan Pablo Urrutia, European General Counsel, weighs in on the Financial Times report that The Council Legal Service is advising the national governments that the European Financial Transaction Tax (FTT) is illegal.
The European financial landscape is facing a rigorous legislative pipeline to address the economic crisis and concerns with the current legislation. The so-called Trialogue negotiations process between the European Council and the European Commission will soon begin – where many twists and turns are to be expected. This guide is intended to provide clarity to the various confusing terms and acronyms relevant to the current market structural changes.
MiFID II negotiations have heated up but is there a light at the end of the tunnel? This week’s edition of The Blotter explores some of MiFID’s hot button issues.
Could the much-debated European Financial Transaction Tax (FTT) proposal come to pass? JP Urrutia discusses new developments among EU member states.