The new BörsenTalk am Mittag event series of SIX Swiss Exchange (see box below) started with an equities focussed webinar looking at the evolution of Broker Algos. Three panelists shared their perspectives on buy-side demands, market structure evolution and how to differentiate in the competitive world of algorithmic execution.

Moderated by Adam Sherlock (Head Equity Sales Europe, SIX Swiss Exchange), the panel featured participants from three of the exchange’s most prominent sell-side members: Sal Rodriguez (EMEA Head of Execution Services, Instinet), Matt Wertheim (Executive Director - Head of Liquidity Strategy EMEA, JP Morgan) and Dr. Vladimir Filimonov (Head of Algorithmic Trading, Vontobel).

Looking at the interaction between brokers and the buy-side, all three participants agreed that their clients have increased their knowledge about algorithmic trading – and therefore also a stronger view on measuring their performance, which is the key factor.

Recording of the Panel

Dark Pools and Their Importance

With regards to the growth of dark trading, the participants pointed out that SwissAtMid, the non-displayed pool that SIX Swiss Exchange launched in 2016, is a valuable source of liquidity – also thanks to its sweeping functionality, allowing a seamless interaction between dark and lit book. The latest enhancement of conditional Block Orders has further increased the appeal of SwissAtMid.

While regulation has and still will influence developments in this space, all panelists agree that there is a clear need from the buy-side for both dark and block trading – and that it’s therefore relevant for algos to provide access to those liquidity pools.

Data Centre Fragmentation and its Impact on Trading
Discussing the planned move of Euronext’s platform from London to Bergamo, the panelists shared their view on data centre fragmentation and its impact on the European trading landscape. From an operational perspective, they expect the complexity and therefore costs of the technical connectivity as well as initial system adjustments to increase.

Furthermore, as the “latency landscape” is about to be reshaped across Europe, concerns were voiced about the impact this might have on the quality of liquidity and on best execution, as spreads might widen and opportunities for latency arbitrage might arise.

Relationships Remain Key
To manage these and any other challenges, the panelists emphasized the importance of good relationships with their respective clients. Despite the fact that algorithmic trading is of course a very technological environment with a growing influence of machine learning and artificial intelligence, establishing trust with clients and understanding their precise needs is crucial to help making them better choices and get the results they are looking for – an approach that SIX Swiss Exchange is equally dedicated to.