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.