60 Seconds with…Allan Goldstein


1. How did you first hear about Plato Partnership and what were your motivations for getting involved?

The Plato values of fostering efficiencies, lowering costs and improving the quality of trading equities are at the core of the Trade Informatics mission to maximize returns by lowering costs. At TI, our solutions have been developed to help eliminate marketplace frictions allowing capital to flow to its highest and best use. We provide solutions to quantify and understand investment costs and facilitate an open dialogue between clients and counterparties as an avenue to reducing those costs and promote an efficient transactional experience. TI is proud to work with Plato’s unique collaboration of buy and sell side participants.

2. What benefits do you see arising for the industry as a result of the Plato / PLIA partnership?

Investment marketplace participants must be able to easily, efficiently and securely share information. Use cases vary widely from standard due diligence questionnaires to order handling instructions, execution policies, commission rates, algorithmic strategy settings and training decks. The PlatoPlia platform is intended as an industrywide utility built to facilitate transparency. Not only is this aligned with the Plato and TI missions but it is also aligned with the overall spirit of MiFID II where governance and transparency are its guiding principals. The power of any such platform lay partly in its ease of use but largely in the size of the network. Having been built for the industry by industry practitioners, PlatoPlia is intuitive and simple. The gravitas of Plato partnership will allow the platform to achieve ubiquity among market participants.

3. Do you feel the industry is adequately prepared for the MiFID II environment?

The tools and expertise to implement the requirements under MiFID II are readily available. Vendors and firms have developed the solutions required and industry events have been unprecedentedly focused on sharing knowledge and best practices. Firms have no excuses not to be prepared except to the extent that they have limited bandwidth for devoting resources, both time and money, to developing a program. The two most challenging issues facing firms are (i) understanding practical issues of the regulation in practice and (ii) developing an overall governance process to demonstrate a culture and spirit of compliance enterprise wide. This second challenge includes developing internal policies and procedures and documenting operational transparency with external counterparts. On the former issue, only time will tell. As 2018 commences, we will learn as some preparations prove to be well designed and others require modification. We can only hope that regulatory guidance continues to be published so such modifications are based on broad consensus.

4. MiFID II brought headlines to the Best Execution requirement by simply changing a word from reasonable to sufficient. What is the real spirit of Best Execution under MiFID II?

There is heightened attention to best execution particularly as it pertains to buyside firms. More than ever, they will need to ensure they’re selecting execution counterparties for the benefit of their end investors. But they want to be sure they are dealing with counterparties that won’t be a source of operational risk or conduct risk in the future. Plato/PLIA streamlines and systematizes counterparty due diligence and ongoing transparency of information flow to manage and evaluate risk. This this refocus on best execution largely follows the publication in mid-2014 of the Financial Conduct Authority’s (FCA) thematic review on best execution and payment for order flow, followed in February 2015 by the European Securities and Markets Authority (ESMA) published the findings of a peer review on how national regulators supervise and enforce MiFID provisions on best execution, concluding that the level of implementation and convergence of supervisory practices was relatively low. What firms should learn from the evolution of best execution under MiFID II is that a documented system of governance and supervision is essential. The Plato/PLIA due diligence platform was built by the buyside specifically to bring efficiency to the task with audit trail precision and report generation demonstrating a strong spirit of governance and oversight.

5. So how does Plato/PLIA actually help to support best execution?

Trade Informatics was proud to participate in one of the most constructive industry developments over the past year and a half, the Equities Electronic Order Handling Questionnaire, developed by members of the Investment Association (IA) and the Association for Financial Markets in Europe (AFME). In June 2015, Plato/PLIA was among a shortlist of only three vendors chosen to have satisfied the working group’s requirements to carry the questionnaire electronically. The group’s initiative aimed to establish a common framework for buy-side firms to request information from electronic trading providers in the European equity markets. The questionnaire covers best execution, trading venue selection, algorithmic trading, non-displayed liquidity, transaction cost analysis, client confidentiality and risks and controls. On algorithmic trading, for example, sell side firms would be asked to answer a comprehensive set of questions about their algo offering, explaining how the various strategies work, whether they can be customised, and how they will react to different market conditions. Plato/PLIA carries a library of many standardized questionnaires and hundreds of questions covering various asset classes and regions to be distributed and managed electronically. Plato/PLIA also provides for any generic information request, disclosure or affirmation systemically in a secure network of participating brokers and asset managers. Lastly, as a workflow management tool, Plato/PLIA includes a market abuse module allowing, via API, identified trade outliers to be reviewed, escalated and signed off through a hierarchy of users with audit trail history and reporting. Plato/PLIA web-based platform is likely to be the lowest cost and easiest to implement MiFID II solution.