What are some key execution trends Turquoise has seen in 2020?
Dr. Robert Barnes: It was remarkable moving into 2020 with that sudden spread of COVID-19 there was a real focus on keeping markets open. We’ve demonstrated very clearly that markets have been resilient. But more interestingly, we went through a number of cyclical periods of activity.
From mid-February, there were significantly volatile days and on those extraordinary days we were able to set new records in terms of value traded on our platforms. Levels of electronic block trading soared and on order book activity, at the midpoint inside the touch, became the majority of value traded in our overall dark pool, providing price improvement to both sides with quality of execution.
In 2016, less than 5% of dark pool activity was blocks, but now more than 57% of that activity is blocks. It really goes to evidence that 2020 is the year that electronic block trading, on order book at the midpoint, has become mainstream.
During the period, we also deployed a number of key innovations with the Turquoise Plato community including the Good for Auction (GFA) order for Turquoise Plato Lit Auctions™ and the Turquoise Plato Trade At Last™ mechanism that references the closing price.
Scott Bradley: The GFA order type is a refreshing new look at the liquidity dynamic within periodic auctions or frequent batch auctions. It is genuinely a new opportunity to cement how you can position Turquoise Plato Lit Auctions™ into more dynamic liquidity-seeking algorithmic stacks. It is specifically designed to be incorporated within lit routing behaviours too.
But simplicity is key with the GFA order, as with Turquoise Plato Trade At Last™. Investors and Asset managers like the closing price as that single point of reference and we acknowledge the importance of the robust closing price formation process of the Primary Market.
With Turquoise Plato Trade at Last™, there’s a chance to look for opportunistic liquidity at a price that you already know without the need for risk management once that closing price has been established. It’s simple and provides a new complementary dynamic to the primary closing auction mechanisms.
How has Turquoise prepared for the end of the Brexit transition period?
RB: As a Group, we are well-positioned for Brexit, and Turquoise recently concluded one of the biggest projects we’ve ever undertaken in introducing a completely new venue within a venue with the launch of Turquoise Europe on 30 November.
Because of the European Securities Trading Obligation effective the first day of trading on 4 January 2021, our customers are telling us there will be a move to send orders for European ISIN stocks denominated other than GBP from UK to European venues like Turquoise Europe. We are entering unchartered waters with a potentially significant shift in liquidity as we promote growth and visibility in the European capital markets through Turquoise Europe.
SB: Turquoise Europe and 4 January 2021 marks a genuinely once in a professional lifetime opportunity to experience and participate in potentially what might be a wholesale shift in liquidity that nobody in the industry has previously experienced.
With such change and such unknown ahead of us, that leads to opportunity – this is our chance to reset, redress, evaluate and re-evaluate. Based on performance and on quality metrics, we have taken the opportunity to re-evaluate certain key areas like with the Turquoise hardware refresh, which reduced latency and allows us to be twice as fast as we were previously.
The beauty of Turquoise Europe is that even with the new hardware, it’s the same functionality so market participants don’t have to learn anything new or factor in new behaviours. The Turquoise workflow that we’ve created and generated with our partners is the same workflow across both platforms.
What is the focus for Turquoise in the year ahead?
RB: Turquoise Plato is about industry collaboration, partnership and innovation. For us, that is what’s important. Everything we have done until now has been about the big picture. How do we minimise slippage costs for investors? How do we help investors get their business done, but also contribute to the long-term investment returns?
What is exciting about 2021 is that with the credibility I believe we have established through our track record of innovation in partnership with the community, we are hoping to take advantage of the opportunity that is ahead of us.
Mike Bellaro: It is fantastic to be a part of Turquoise Plato, which is the gold standard of partnership in the marketplace. Working collectively with buy-side, sell-side and venue to bring creative market solutions that add value to the end investor is at the heart of everything we do.
It has been an amazing journey since the partnership was created. The record volumes we have seen this year during challenging market conditions is a testament to the value of working in collaboration to create a venue of trust that investors can rely upon. We look forward to bringing further innovation to the marketplace in 2021.
SB: I think early 2021 is all about uncertainty and the unknown breeds of uncertainty. However, the track record of trust through partnership that has been built up with Turquoise that delivers that robust, resilient platform and outcomes to market participants is a comfort as we move into that unknown territory.
People talk about the flight to quality and safety during market uncertainty, well Turquoise is absolutely the pan-European solution to that.