Trading costs, market access and sell-side retrenchment are the top concerns for buy-side firms active in listed derivatives trading, according to a new research paper.
Tech vendor Object Trading interviewed a range of hedge funds, proprietary trading houses and CTAs in its research, charting their main concerns with trading actively in the global futures markets.
Many were regulatory driven, such as rising costs and sell-side bank scaling back their clearing services.
The paper noted that for tier two and three buy-side firms, the challenge of opening accounts with bank clearing brokers is becoming increasingly difficult.
Other concerns included execution quality, fragmented liquidity and unprecedented variation in volatility.
“Dramatic changes in market structure have increased the complexity and success of running a trading business,” Steve Woodyatt, CEO of Object Trading told theTRADEnews.com.
“Sell-side retrenchment due to regulatory costs and explosion of markets and products has become an issue. We’re noticing bifurcation of the buy-side as a result.
“The two camps are: those who are hunkering down waiting for the good times to return, where some have shut down already or are choosing to merge to achieve scale; and, those who are flourishing in the new environment. Of the factors within their control, a primary and perhaps surprisingly effective lever to building resilience is taking back control of their market access.”