Thought Leadership

Plato Partnership launches first research paper from MI3 Market Innovator

Published In June 2017 | Sponsored by Plato Partnership

At its core, Plato Partnership is about anticipating how trading is going to change, what impact these changes will have on end investors, and how we can deliver the most successful and cost-efficient solution for the marketplace. Plato has created MI3 to produce research that will promote efficient markets and appropriate market structures for the benefit of all market participants.

Working in partnership

At the very beginning of the Plato journey we realised that only by working in partnership with all parts of the value chain would we increase the probability of success in developing innovative and effective solutions for all market participants . Plato has already brought together asset managers, broker dealers, and a venue to deliver for the market.  Now, through MI3 a partnership has been formed with esteemed industry academics to drive an independent and objective approach to market structure solutions  in the interests of end investors.

Today, Plato Partnership consists of a wide range of market participants, from the largest firms on both sides of the trade to newer entrants, infrastructure providers and leading figures from global academia. Plato took a big step forward in March with the announcement of 15 new Plato Partners, representing a diverse group of firms in the marketplace, joining our 16 founding members from both the buy and sell sides.

Bridging the worlds of trading and academia

Last year we were delighted to announce the launch of MI3, the research arm of Plato Partnership which was created to produce independent academic research by leading academics around the world.  Accordingly MI3 research will promote efficient markets and appropriate market structure for the benefit of all market participants.

Crucially, MI3 brings together the collective views of the market and bridges the worlds of trading and academia to create a vehicle through which real change can be explored and implemented.

Over the last few months Plato Partnership members have focused on numerous initiatives of which we are proud.  MI3 has also progressed well by identifying potential key research topics, forming an independent academic board, and launching the first MI3 academic conference in June, ‘Evolving Market Structure in Europe and Beyond’. 

In addition, today marks the significant milestone of producing MI3’s first paper Shedding light on dark trading in Europe, authored by Professor Carole Comerton-Forde, Professor of Finance at the University of Melbourne. By redeploying Plato Partnership funds to commission this research, members have effectively given back in the interests of all participants.

This milestone also reflects the key elements of the Plato Partnership model which capitalises on the intellectual and financial capital of the group to deliver tangible results ultimately for the benefit of end investors.

Shedding light on dark trading in Europe

MI3’s maiden paper, Shedding light on dark trading in Europe, authored by Professor Carole Comerton-Forde, Professor of Finance at the University of Melbourne, examines how firms need to adjust to new restrictions on dark trading and the closure of Broker Crossing Networks that will come about during MiFID II’s implementation in January 2018.

While the industry will be able to weather several of the changes easily, certain points, such as double volume caps being assessed by the European Securities and Markets Authority (ESMA), are likely to have more dramatic and adverse effects, with possible suspensions prohibiting dark pool trading at venues if trading volume caps exceed accepted limits.

This paper marks the first output from MI3 and represents a realisation of our vision to provide a mechanism whereby all market participants can collectively address regulatory imperatives in tandem with the leading academic minds, such as Carole. There is not a firm in the marketplace today that is not going to find this paper an important food for thought as we move towards MiFID II next year.

The inaugural Plato Partnership MI3 academic conference, Evolving Market Structure in Europe and Beyond, will be held at Sadler’s Hall, London, on Thursday 29 June, with 40 senior academics attending.