1. You initially expressed reservations about the Plato Partnership project – as the organisation has grown and matured, what are your views of the organisation today?
Finding liquidity has been a top concern for investors for many years now. Block liquidity has been the most sought after as a means of minimizing impact and is more important now than ever as even very small participation rates can result in market impact. I am in favour of any system that helps us to both source liquidity and reduce market impact, but fragmentation of such solutions has to be borne in mind as too many similar competing solutions will erode some of the benefits. Conditional venues allow us to progress with our orders without missing out on potential opportunities elsewhere. The Plato Partnership gives users the assurance that the Block Discovery System finds equality between users and that the data gathered will be used for all users benefit.
2. It has been just over a year since the cooperation agreement between the London Stock Exchange Group’s Turquoise and Plato Partnership. In that time, €50.2 billion has been successfully matched by investors – this equates to 92.5% of the total volume ever matched through the venue. As a result, do you expect greater collaboration between the buy and sell side in the future?
Buy side to buy side networks in the past have proven less successful than networks that embrace the sell side. The tricky part is maintaining an equilibrium between both sides. When you have competing services with almost identical offerings one will normally win over the other with small differences leading to a big margin of gain. When Plato and Turquoise BDS decided to join forces, participants no longer had to choose between them. My experience of the unified group has involved buy sides and sell sides working together to attain a result that is mutually beneficial.
3. How do you expect MiFID II to impact activity on Turquoise Plato (and similar venues)?
I believe that MiFID II will lead to traders making more use of large-in-scale (LIS) venues where they can avoid the market impact often experienced when trading on lit venues and against short term liquidity providers. As other venues provide similar conditional order systems, users will have to form prioritisation strategies, that type of decision will most likely be quantitative and based on performance data.
4. How much change do you expect to your existing approach to best execution, post-MiFID II?
We have always sought to source natural block liquidity where possible, so we do not expect much change to the bulk of our trading. Where we will have to change is for trading orders below LIS. We will measure and monitor these trades closely to decide on the best course of action for these types of trades.
5. What would you like to see from the Plato Partnership in 2018?
I would like to see the results of the academic studies going forwards. In particular, it would be useful to demonstrate how the results of these studies can be put to practical use in determining better way to trade in the future.