Voice Communications Solidifying Role in Institutional Trading – Finance Magnates
May 5, 2017 \ 5 Comments
Full Article: Finance Magnates
Approximately 90 percent of the trading professionals participating in a 2016 Greenwich Associates study utilize voice communications in electronic trades, primarily for post-trade interaction.
I think that rather than announcing anything new, what this article does is put a nail in the coffin of the Messiah view that electronic trading would be the answer to all evils. In reality there are segments and trades for electronic and voice/talking. Amazing no? I am still surprised that some buy-side forms still view ‘voice’ as calls from bank Sales rather than a pure multilateral intermediary. The dealers have never been to prone to explain how that works.
I think I could have summarized the findings of a study related to the future of voice in trade execution as follows: as long as people receive a value to speaking with a person that is greater than any incremental cost associated with paying that person for the said value, voice will survive.
Nice and concise. 100% agree. The million dollar question, then, is: What value does voice provide to institutional investors that electronic doesn’t yet, and how deep/wide is that moat? A couple thoughts: 1. Belief that sales-trader has even a tiny bit of useful information. I have to pay a commission to someone anyway, if I can save half a penny on 1mn shares I’m coming out ahead, right? This perception can easily be confirmed once or twice — either by chance or by the sales-trader biting the bullet for a big client — for this belief to persist a long… Read more »
“Even in U.S. equity markets, often viewed as one of the most electronic markets in the world, high-touch trading, or single-stock trades routed to a sales trader, still represents the largest execution channel.” Let the above quote sink in. We’ve been banging this drum since the founding of FNL. If this is this is where the most organized, regulated, and liquid market ends up, what are the prospects for electronic trading in the large majority of FI products? The answer is, there will be more electronic trading, and more protocols helping that increase. The million(s) dollar questions are, how much… Read more »
Unsurprisingly I fully agree with the comments already made. Execution over chat and phone is still heavily utilized given the bilateral nature of the market and getting color still remains a key part to executing the trade. In EMEA with MiFID II looming all electronic trading platforms are lining up to tell the Buy-side they must execute across an MTF / OTF etc. otherwise it will all be so much more costly, so much harder, the world will end!!!!!!!….. in reality this is a self serving approach in order to generate ever higher execution fee’s for what in fixed income… Read more »
Blackrock’s Richard Prager: The Liquidity Is Out There – Institutional InvestorMarch 18, 2016
Everyone is Worried About the Thing Markets Need Most, But They’re Not Asking the Right Questions – Business InsiderMarch 25, 2016
US Companies Overpaying for Bonds; Banks May Be to Blame – ReutersMarch 31, 2016