Despite the rise of high-frequency trading (HFT) in US equity markets, shared connectivity platforms hosting both high-speed traders and participants that do not rely on low-latency strategies have proven successful, a panel of sell-side and connectivity experts agreed.
Speaking at a TABB Group event in New York on Tuesday, Mark Casey, CEO of CFN Services, a firm that provides low-latency market connectivity, said participants’ performance had levelled the debate on low-latency trading.
“Performance has been democratised,” he said. “Five years ago, [the focus was on] custom market data delivery and trade execution analytics. Today it’s a common infrastructure that a firm interested in the final microseconds shares with a firm that just cares about being non-intermediated.”
This non-intermediation – whereby participants, particularly the buy-side, connect directly to trading venues with minimal broker oversight – has given asset managers greater autonomy to execute trades directly in trading venues.
Speaking alongside Casey on the connectivity panel, Brennan Carley, global head of Elektron and platform at Thomson Reuters added that certain sell-side firms had pushed to keep spreads wider to keep revenues high.
Alongside this trend, however, Carley said a growing number of sell-side firms were pushing to outsource connectivity offerings. He said one Thomson Reuters client – a global bank based in Europe - had decided to concentrate on its domestic market and outsource its global trading connectivity.