The significance of retail trading is becoming increasingly hard to ignore among the institutional trading community, despite persisting roadblocks within Europe, experts at the Tradetech conference in Amsterdam explained last week.
Nathalie Ruiz, head of equity sales at Euronext, was quick to praise the fact that the industry as a whole is demonstrably looking to accept these flows – and adjust accordingly.
“I’m very pleased that we are discussing retail at an institutional conference. When I started 20 years ago in the retail space, this would not have happened […] Retail is not niche anymore and Europe is not the US – Europe has its own behaviour, its own market structure, and its own pace.”
Providing some numbers to back the prominence of retail and its established presence, Ruiz shared that one of the peak days Euronext had across its seven core markets (not including the recently acquired Athens exchange) saw retail reach €2.6 billion, adding that “many” days have also reached over €2 billion.
Additionally, the experts unpacked some of the key barriers and where the industry should be focused as it looks to leverage the growing retail landscape.
Alex Dalley, head of European equities, Cboe Global Markets, explained: “Europe has made it difficult – for retail we don’t have any of these bus stops that they have in the US, there’s the data considerations, and you also don’t have a very efficient post-trade infrastructure for retail to scale across border.
“The post -trade inefficiencies are really a blocker getting a settled trade, bringing trades back to local countries.”
However, speaking to the empirical changes on the horizon, he pointed to the Savings and Investment Union looking at how to stimulate retail investment, as well as the European Commission’s Market Integration and Supervision Package (MISP) – sometimes referred to as Mifid III – focused on how to stimulate risk investment, as well as the ever-popular topic of the consolidated tapes.
“I think the right things are happening and we’re kind of at this pivotal point right now,” affirmed Dalley.
Read more: JP Morgan Personal Investing’s Jason Conan Davies on unlocking retail participation
Elsewhere, David Haberfellner, head of execution desk, Erste Group Bank, gave his insight into the retail flow discussion, emphasising the significance of consistent retail-focused improvements: “Products are important. We as Erste Group don’t have direct retail clients, but we serve our subsidiaries with the product offering. So what we improved in the last few years are of course savings plans – it’s sticky money so it stays in the market usually.
“We’ve also focused on a lot of product innovations. For example, we introduced fractional trading – no one is interested in buying 11 top two. But the retail investor usually comes from a perspective of ‘I have a few thousand euros left, so I want to invest €2,000. So this maybe also helps to reduce the entry barrier a little bit.”