Buy-side to scrutinise trading decisions under BestEx, warns UBS boss

Buy-side decisions on trading partners to be subject to greater scrutiny, according to UBS boss.

Incoming rules on transparency and best execution will force the buy-side to more aggresively scrutinise their trading decisions, according to UBS’ Richard Semark.

Speaking at TradeTech in Paris Semark, CEO of UBS MTF, said clients are now in the stage of making key choices to their models and strategies in response to Mifid II.

“We are seeing a lot more transparency on the decisions being made by the buy-side firms as to how they trade and who they trade with, but those decisions are subject to a lot more scrutiny,” said Semark.

“Mifid II is somewhat a catalyst, but the move to having much more responsibility with the buy-side desks is what is really going to change the marketplace.”

Christopher Marsh, European head of advanced execution services (AES) at Credit Suisse, also said that clients have now come to a point where they will have to make choices to how they will operate in a post-Mifid world.

Marsh added these choices would greatly impact what indicatives will survive.

“[The marketplace] is going to be collaborative and somewhat messy. And to me it is going to look like it did after Mifid I where you see regulatory change bring out all kinds of new things, of which 60-70% will disappear within 12 to 18 months, but a few of them will completely change the landscape,” Marsh said.

Aquis Exchange is one initiative that will be heavily reliant on the buy-side going into Mifid II. In February, it opted to ban aggressive high frequency trading (HFT) on its venue, a move that is paying off according Alasdair Haynes, CEO of Aquis.

“We have 20 new banks that want to join, as well as four new market makers that want to join us. The business has completely changed over a period of eight to ten weeks,” said Haynes.