Apr-Jun 2007, Issue 12

As asset managers incorporate hedge fund investment techniques into the portfolio construction process, the challenge facing buy-side dealing desks is to move beyond simple order placement to offering active, tactical trading in support of the portfolio manager. Eugene Goosen, head of trading and portfolio control at Metropolitan Asset Managers in South Africa, spoke to The TRADE about what this means for the skill-set of traders and the evolutionary path that lies ahead for the industry.

Liquidity fragmentation may well lead to a reduction in execution costs post-MiFID, but any perceived gains could be wiped out by the costs of clearing and settlement. Do traders appreciate the challenge, cost and complexity of clearing and settlement in a post-MiFID landscape of multiple liquidity venues? If not, they should, since it's a fundamental requirement of Article 21 and achieving best execution.

Georgina Clarke, director, responsible for PT & Execution Sales in Southern Europe and Sascha Frick, vice president, responsible for PT to German speaking Europe at Merrill Lynch, explain why portfolio trading and connectivity should not be seen as alternatives, but rather as integrated techniques for both buy- and sell-side desks.

How much control does the buy-side want of the execution process? Jerry Lees, head of alternative execution at CA Cheuvreux, examines the ongoing evolution of the buy-side and sell-side relationship.

On 1 November the curtain will be raised on the post-MiFID world - a world in which liquidity fragmentation poses both a challenge and an opportunity. Tom Middleton, head of European Algorithmic Trading, and Pinar Emirdag, director of European Business Development at Citi, highlight the key role that smart order routing will play in achieving best execution.

Conor Howell, ETF specialist sales trader at Societe Generate looks at the growing popularity of ETFs in the UK and continental European markets and explains the attraction for fund managers and hedge funds alike.

However good the skills of asset managers in stock selection may be, they will suffer from ignoring technological advances, writes Tony Mackay, CEO, Instinet.

Buy-side firms are entitled to know the circumstances surrounding the execution of child orders, but the information is not always getting through, writes Joseph Wald, CEO of EdgeTrade.

Low cost absolute return strategies are among the fastest-selling products in asset management today. For custodians reared on servicing long-only institutional funds they pose novel service challenges, writes Nick Thomas, business development, Institutional Fund Services at HSBC Securities Services.

Blair McPherson, director, technical sales, market products at RBC Dexia Investor Services explains how the securities lending market has responded to the challenge of meeting hedge fund demand.

Dr John Bates, founder and vice president, Progress Apama discusses the competitive edge to be gained from market aggregation, rules-based trading, real-time bond pricing and auto-hedging algorithms.

Algorithmic execution is no longer confined to equities, observes Jonathan Wykes, European head of AES sales for FX at Credit Suisse, and now promise to lead to a paradigm shift in the FX markets.

Gerhard Leβmann, member of the Executive Board of Deutsche Borse Systems, examines how the exchange is responding to the demand for low latency trading solutions.

Pascal Morosini, executive director, head of Securities Financing Sales and Relationship, Clearstream Banking, explains the recent expansion in collateral asset classes in tri-party collateral management.