Ready For The Next Revolution? FIX Conference Australia 2013 – What you may have missed

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The impact of regulation

  • ASIC is being widely praised as a responsive and accessible regulator
  • SFC regulation from Hong Kong is still causing concern in Australia
  • OTC Derivatives clearing regulation still under focus
  • Innovation may have suffered; large amount of resources have been primarily focused on regulations and the ways to address it in last 12 months
  • Australia’s superannuation funds’ size will outgrow the opportunities available in the domestic markets
  • Speed of change is one of the biggest challenges for regulators in markets and the pace of change in regulation will continue
  • Buy-side pleased by the amount the regulators and exchanges have engaged with them
  • The onus is higher on institutional clients to understand the type of flow they’re interacting with
  • Exchanges and regulators don’t seem to cooperate as much with each other as the buy-side would like to see

The impact of changing markets

  • Changing nature of algorithmic trading as benchmarks evolve and market structure continues to change
  • The ongoing impact of dark trading – competition between brokers and exchanges is a key area, and regulating to ensure dark liquidity is fair
  • Standardisation of OTC derivatives markets continues to evolve
  • More emphasis on the buy-side for being aware of algo capabilities and to be aware of how they are interacting with the market
  • Many concerns around HFT had been overstated; no evidence of harmfulness to the market
  • If you want to participate in size, you have to take place in the closing auction
  • Bid/offer volume has collapsed in the last few months, but volumes remain stable
  • Australian banks have been slow to embrace E-FX
  • Dark pools have changed their stripes as soon as people started reporting volumes; HFT, retail, institutional, etc. then the average execution size dropped dramatically
  • All standardized OTC derivative contracts should be:

– Traded on exchanges and electronic trading platforms
– Cleared through central counterparties

  • The buy-side is collaborating more and more because the algorithms are not designed to get chunky liquidity done; Liquidnet has done a good job; it’s driven by liquidity and block trading rather than algorithms