Allianz trading chief predicts reduced execution role from banks post-MiFID II

Sell-side could provide the buy-side with more tools to achieve best execution, rather than execution services.

Sell-side institutions will move away from providing the buy-side with execution services, shifting instead towards providing best execution tools, according to a panel at TradeTech.

Global head of trading at Allianz Global Investors, Eric Boess, explained buy-side best execution responsibilities will lead to a greater sell-side focus on providing tools to enable asset managers to improve execution quality.

“MiFID II makes it clear the sell-side will increasingly move from being providers of full execution, to providers of tools for the buy-side to achieve best execution,” he said.

“The trader will be assessed on the result of the transaction and it’s in his best interests to decide himself which broker or venue to trade with because the result ultimately lands on his desk.”

Global head of trading at GLG Partners, Erik Koenig, added transaction cost analysis (TCA) tools provided by the sell-side will be vital to ensure best execution compliance.

“Interaction with the sell-side, the quality of content and execution as a broad-based metric with TCA tools to overlay this interaction with the sell-side is absolutely critical,” he told delegates.

Boess added he prefers external TCA tools for best execution as opposed to building TCA in-house.

He said: “MiFID II is not one size fits all. You have to ask the TCA providers the right questions. I prefer it to be provided by an outsider because it is more credible and looks better to clients.”