Predictions for 2019: Trading and regulation

Experts from across the industry provide their predictions on what will be the biggest trends of the coming year.

Matthew McLoughlin, head of trading, Liontrust Asset Management

Looking back on 2018 I think we can all agree that we achieved a great amount as an industry.  That being said, I don’t see things slowing down in 2019.  Brexit will obviously be in the headlines and will continue to take up a lot of resource on buy-side, sell-side and execution venues alike.  Regulatory and political developments, particularly on periodic auctions, tick-size regimes, mid-point trading and SIs have the capacity to change market structure yet again in 2019. 

Change is the only constant, but some things have already changed for the better and further forced amendments could only harm the end-investor in the long run.

Eric Heleine, deputy head of buy-side trading desk, Groupama Asset Management

The evolution of the structure of the financial markets will be a new source of complexity for 2019. The liquidity on equities will be impacted by the regulator, who’s already trying to adjust MIFID II side effects, like the SI regime or periodic auctions. The revision of RTS11 and the possible implementation of tick size regime on all band sizes can become a real challenge to find real liquidity.

So, while politicians and regulators want greater transparency in markets, the role of asset managers in the management of European markets is to be improved. The fixed income business also requires a better reading of the available liquidity and its location. In a more volatile market the RFQ should be challenged by the establishment of new alternative liquidity pool where the buyside will become a new liquidity provider.

Scott Bradley, head of sales and marketing, London Stock Exchange Secondary Markets and Turquoise

MiFID II was possibly the most far reaching overhaul of market infrastructure in a generation. As a result, a core focus for 2019 will be managing the lessons learned.  In addition, navigating the “known unknowns” in the market, including those surrounding Brexit, will further highlight the importance of partnerships amongst market participants. 

There will be a continued drive for innovation and decisions based on meaningful data in order to make best execution become a reality. The vast amounts of data generated, collected and analysed through 2018 will need to be employed accordingly in 2019 as competition for liquidity will continue to toughen.

Enrico Bruni, head of Europe and Asia business at Tradeweb

Apart from Brexit and its impact on market functioning and MiFID II/MiFIR calibration, next year’s focus will be on new best execution requirements, and the introduction of mandatory clearing and trading for CAT 3 and CAT 4 firms. Therefore, we expect to see further investment in derivatives trading, as well as automated execution mechanisms, such as our AiEX tool. Building cost- and time-effective workflow solutions will provide trading desks with scale and efficiency when executing risk.