Access to technology is a key component of delivering best execution to clients, regardless of your size, according to Landsbanki Kepler, the European investment banking arm of Iceland’s Landsbanki.
Without smart order routing (SOR) technology, it is “absolutely impossible” to deliver best execution, Thomas Biotteau, IT project manager at Landsbanki Kepler, told theTRADEnews.com.
Since April, Landsbanki has been implementing SOR technology from software provider GL Trade, which has also provided the investment bank with tools to build and report on the audit databases that allow best execution to be measured.
Through use of third-party SOR capabilities, Landsbanki is now able to route around 15% of order flow away from home markets to alternative trading venues. As a result, the broker has been able to deliver price improvement of between 0.3 and 1.2 basis points to clients.
For a smaller-sized brokers such as Landsbanki, being able to respond to the direction of the market with the best technology is more important that watching competitors’ strategies. “Implementing this kind of technology is a challenge for us, because it is a big investment. However, we see it as necessary to avoid having problems in the future,” said Biotteau.
As well as major European exchanges including Euronext in the Netherlands, Belgium and France, Xetra in Germany and SWX in Switzerland, Landsbanki is only connected to Chi-X until other multilateral trading facilities enter the market. It hopes to be connected to NYFIX’s Euro Millennium dark pool, Turquoise, NYSE Euronext’s Smartpool and Nasdaq OMX in the near future.
Another crucial element of delivering value to clients for Landsbanki is the ability to prove best execution on demand, says Biotteau. To this end, it has established a dedicated team whose sole focus is on providing clients with best execution data for any size of trade within an hour.
“We are trying to connect to as many MTFs as we can and we want to increase our market stock coverage of mid-cap stocks,” said Biotteau. “At the moment, we trade the major indices of France, Belgium, Germany and the Netherlands. We want to extend this by trading Nordic and UK stocks.”