Depleted wallets, order allocation, CSA and algo trends, regulations and top brokers point to similarities between the US and European markets, but wallets and regulation will cause divergence, says Miranda Mizen, TABB’s director of equities research.
Lower volumes have hit both continents hard, but the combination of a European wallet that plummeted in 2012 and the opening door to commission-sharing agreements (CSAs) will cause those who trade in Europe to choose brokers and products with a different eye, according new TABB Group research, “US and European Buy-Side Equity Trading: An Aggregated View”.
Most importantly, equity market structure change is on the outer ring of the SEC’s radar, Mizen says. “It’s in bull’s eye of regulators and politicians in Europe, and the combination of Basel III, MiFID II and national rules will mean a fluid and uncertain trading environment”.
Still, there is much that is similar, she adds. “Demands from the buy-side for greater transparency into algorithmic environments, a voice in the creation of new coverage models, natural block trading products and help with markets that are hard to navigate – all of these issues find common ground, but the intensity of opinion and cause-and-effect has a very geographical feel to it.”
The new report, based on 177 in-person interviews conducted throughout 2012 with US and European asset managers and hedge funds specific to equity trading in the US and major European markets, representing firms with USD33.3trn of global asset under management, covers trends and outlooks for the US and European buy-side equity trading markets, highlighting variations due to the market traded, type of firm, geography and size.
