60 seconds with…Professor Dr Peter Gomber, Chair of e-Finance, Faculty of Economics and Business Administration, Goethe University.


1. As an independent observer, what are your thoughts on the Plato Partnership project and their aims more generally?

Without doubt, the idea behind the Plato Partnership is fantastic: To set up a platform that enables the Buy Side, the Sell Side and academia not to only discuss but to jointly shape the market structure of the future. Being an academic with industry experience, I know that it is not easy to bring customers and competitors together with a spirit of collaboration for the benefit of market structure.


This in itself has tremendous value. From an academic perspective, the Market Innovator (MI3) concept promises and has already delivered a lot of encouraging new ways of industry-academic collaborations: joint conferences, easy accessible and new rich data-sets and last but not least sponsoring of valuable and innovative research projects.


2. What role do you think academia can play in the development of global market structure?

Market Microstructure and Electronic Finance are definitely fields of research that had a tremendous impact on the real-world. The design and structure of our markets clearly benefited from the results of academic research and will benefit in the future. These days, regulators prescribe and shape market structures and market processes more than ever in the past.


They have learned that both evidence-based rule making and thorough regulatory impact assessment are imperative for better regulation. And they are more and more getting into dialogue with academia to understand whether and where academic results help to shape their policy decisions.


Given the fact that Brussels and Paris (the EU Commission and ESMA) are in fact the designers of European markets today and have taken over many of the responsibilities of market operators in this respect, this interaction with academia is extremely valuable for the benefit of our markets.


3. Together with your co-authors Benjamin Clapham and Sven Panz, you received the Best Paper Award of the CEPR-Imperial-Plato Inaugural Market Innovator (MI3) Conference. Can you give us some brief insights on the key results of this paper?

The key research question of our paper is to investigate whether a co-ordination of circuit breakers is necessary in European equity markets. Therefore, we analysed whether we can find volume and volatility spill overs to alternative trading venues during volatility interruptions in DAX30 stocks during a volatility interruption in the main market (in this case: Xetra).


In contrast to existing theoretical research, we did not find any evidence for trading volume or volatility spill overs in our empirical analysis. Counter-intuitively, the market share of the main market increases sharply during a circuit breaker and a higher level of market fragmentation even strengthens this shift of market share towards the main market. Market participants seem to withdraw their trading activities if no price signal of the main market is available.


And we also observed that the higher the level of HFT activity, the more trading is concentrated on the main market during the volatility interruption. Consequently, our results provide empirical support that a coordination of circuit breakers among venues imposed by regulators does not seem to be necessary, even against the background of increasing fragmentation in the European trading environment. Markets are implicitly coordinated by the traders themselves who refrain from trading on alternative venues during a circuit breaker on the main market.

60 seconds with…Neil Bond, Partner and Head of Trading, Ardevora

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.



60 seconds with…Anish Puaar Market Structure Analyst, Europe Rosenblatt Securities Inc.

Since 20 October 2014 launch of the original Turquoise Block Discovery service to the end of November 2017, investors successfully matched €58 billion via Turquoise Plato Block Discovery™ of which €54 billion or more than 92.5% matched since the September 2016 cooperation agreement with Plato. How do you think MiFID II will impact block-trading volumes in Europe?

It’s clear from the MiFID II rules that regulators believe dark pools should mainly be used to trade larger orders. Although many disagree with this notion and believe that the double-volume caps for smaller dark trades are a sub-optimal regulatory response, the new rules have encouraged innovation among trading venue operators. As a result, block trading is already on the increase and now represents 10% of total dark trading today, according to Rosenblatt’s estimates. We would not be surprised to see this double over the next year, as market participants become more comfortable with the new trading landscape and see the potential benefits of resting large, passive orders on block venues.

What role can/should academics play in the development of market structure?

The increased fragmentation and automation of equity markets over the last 20 years has resulted in an explosion of market data, which gives academics more opportunities than ever to evaluate modern-day market structure. While it is important that academics have access to meaningful trading data, they also need access to practitioners to help them properly assess market dynamics and offer empirical evidence on the state of European market structure. Plato can play an important role in helping to foster engagement between academics and market participants by bringing these two communities together and encouraging research on current issues facing European markets.

What are your main market structure concerns as we finally move into MiFID II?

One of the most controversial issues stemming from MiFID II is the systematic internaliser regime for equities. We’ve been looking closely at both the regulatory and operational aspects of the SI and it’s clear that some aspects remain poorly understood. We think the market would benefit from more transparency from SI operators so that traders and investors fully understand the benefits and risks associated with these new types of execution venues. Without adequate transparency, there is a risk that regulators will take drastic action and limit or even ban SI trading.


60 seconds with… Dr Robert Barnes, CEO, Turquoise and Global Head of Primary Markets, London Stock Exchange Group

1. It has now been 1 year since the cooperation agreement between Turquoise and Plato Partnership. In your view, what have been the big successes for Turquoise Plato in that time?

Turquoise and Plato Partnership share values and a vision for an Open Access market place that delivers the best result on a continuous basis, the very definition of best execution. Designed in Europe and refined in partnership with both buy side and sell side, Turquoise Plato Block Discovery™ is an innovation that works. The September 2016 announcement of the cooperation agreement with Plato and the London Market Open where Turquoise rebranded its dark services as Turquoise Plato™ catalysed wide adoption of Turquoise Plato Block Discovery™ with a focus on quality execution and Large In Scale (LIS) behaviour.  Since 20 October 2014 launch of the original Turquoise Block Discovery service to 13 November 2017, investors successfully matched €54.3 billion via Turquoise Plato Block Discovery™ of which €50.2 billion or more than 92.5% matched since the September 2016 cooperation . While it took 2 years to match the first €6 billion, by October 2017 Turquoise Plato Block Discovery™customers matched €7.55 billion in just a single month, a new record. The amount of LIS value traded as a proportion of all Turquoise Plato™ mid point activity has grown from 1% during first half of 2016 to 4.8% in September 2016 to 25.8% in October 2017. We were honoured Turquoise Plato Block Discovery™ won The TRADE Editor’s Choice Award for Block Trading Venue on 25 October 2017. Our biggest success is the consistently positive feedback from buy side and sell side customers that tell us they achieve great fills characterised by high firm up rates, low reversion, high trade size with no information leakage.


2. How do you think MiFID II will impact activity on Turquoise Plato?

Turquoise Plato™ offers mid point matching enabling investors to save implicit costs – half the bid offer spread – for trades of all sizes. MiFID II will introduce constraints around dark trading below LIS for stocks captured by the double volume caps. This will continue to drive market behaviour towards order flow above LIS and pre-trade transparent trading innovations that can serve orders below LIS. A combination of robust automated reputational scoring, independent quantitative analysis evidencing quality of the LIS trading mechanism, and an independent surveillance oversight add to the integrity of Turquoise Plato Bock Discovery™ for the matching of undisclosed Block Indications that execute in Turquoise Plato Uncross™. With more than three years of empirical evidence, Turquoise Plato Uncross™ is a trusted mechanism that can serve as execution destination of choice for Large In Scale electronic execution as well as share its best periodic random auction-like qualities to feature in the innovation of Turquoise Lit Auctions™.

3. How would you like to see Turquoise Plato develop over the next 12 months?

Turquoise Plato™ continues to serve investors seeking high quality liquidity with an efficient design minimising implicit costs in the act of buying and selling. In a macro environment of low interest rates and developed market demographics driving search for growth, Turquoise customers are trading an increasing number of mid and small cap securities as well as seeking exposure to companies from countries that do not have negative interest rates – such as emerging markets. To that end, Turquoise in October 2017 activated two further initiatives: hosting an emerging market event highlighting the ability for customers to trade – via Turquoise – emerging market securities from Czech Republic, Hungary and Poland with the same developed market workflow through single connection to Turquoise as that for developed market securities of, for example, UK, Germany or France; and adding AIM 50 plus reserve list securities to Turquoise stock universe to provide the same suite of execution channels for these AIM growth market companies as are available for the largest blue chips in the FTSE 100. Furthermore the ability of Turquoise Plato™ to save implicit costs – half the bid offer spread – is available for these AIM securities plus those of Czech Republic and Hungary, all of which feature bid offer spread costs much larger than those of developed UK blue chips – with potential price improvement at the mid point offering significant beneficial economies to investors. During 2017, Turquoise Plato™ has grown to become clear #1 broker neutral mid point dark venue of choice for UK listed securities – including international company shares listed on LSE’s main market as well as company Depository Receipts on the International Order Book. This is important as the UK represents more midpoint dark activity than any other European primary market. During the next 12 months, our aim is to raise awareness among Equity Capital Markets and Corporate Finance advisers: that via single connection to LSEG data centre, customers can access both LSE and Turquoise full suite of execution channels offering secondary trading quality of liquidity available for LSE listed securities that can meet the increasing global demand for equities in a world of increasing direct contribution pensions – and their respective needs for growth and secondary liquidity.

What role do you think academia can play in the development of global market structure?

Academic analysis can provide independent views that can inform the industry debate, in particular, regarding the design of external market structure and workflow methodology improvements in order to achieve better execution outcomes. Turquoise champions the application of scientific rigour to understand the market landscape, to summarise observations and to publish relevant insight, so that customers can share these empirical references with their clients, compliance officers, and regulators to justify further use of Turquoise Plato™ respective services.

60 Seconds with… Paul Squires, Global Head of Trading and Securities Financing, AXA Investment Managers

How did you come to be involved in Plato Partnership and what appealed to you about the organisation?

I was approached by some of the (buy and sell side) founders at a preliminary stage and immediately realised that this was a vision which had potential due to the representatives. I was drawn to the strong theme of collaboration and the desire to create a vehicle which would target applied enhancements rather than just hypothetical debates which were the norm. What struck home was a recognition that to make it sustainable as an endeavour, it should be a utility and that particularly appealed to me. The other theme that was interesting was a shared appetite to innovatively re-design the traditional market dynamics to enhance the end clients’ experience. All of these aspects created a sense of being pioneers in looking at issues from a different perspective. 

What role do you think academia can play in the development of global market structure?

I think academia provides both the empirical insights to drive market enhancements and a reference point for where practitioners feel the theory falls short. More than that I think it adds much needed credibility by being independent and uncompromised – free of commercial objectives which arouses the type of suspicion that we witnessed around the launch of ‘Flash Boys’. Returning to the perception and experience of end clients, we have to remember that this is an industry with significant PR problems and the trust of investors needs to be carefully and robustly restored.

How much change do you expect to your existing approach to best execution, post-MiFID II?

There are some significant operational changes that are required by the directive (the deluge of data fields that need to be reported for example) but I think the key impact will result from the shift of responsibility to the buy side. Historically the buy side only had obligations around best selection-applying due diligence to the decision of which broker to use (with the broker then ‘owning ‘ best execution and being much more influential in managing the order) but the onus is very much now on the buy side trader to evidence their decision making for which strategies to use, what their objectives are and how historic performance will guide future decisions. As the (vastly expanded) post trade data begins to be evaluated, buy side desks will have to be increasingly discriminatory in where their flow goes and this could cause paradigm shifts to the distribution of activity. I think this is why you are seeing so much adoption of algo wheels: a simple operational framework which self- governs best execution requirements.

Will you be using assisted trade reporting?

We don’t intend to and have signed up to using an independent third party vendor solution. I can see why this would be a consideration for some but we felt we would rather not be reliant on brokers (and their decisions around whether to become SIs or not)-particularly in this heightened environment of inducement sensitivity!

60 seconds with… Andreas Park

60 seconds with… Andreas Park


Andreas Park, Associate Professor of Finance, University of Toronto


As an independent observer, what are your thoughts on the Plato Partnership project and their aims more generally?

It is terrific that the buy-side and the sell-side have come together in the Plato Partnership initiative to enable academic research.  Ultimately, the buy-side and the sell-side have a common goal: they want well-functioning financial markets. Yet industry players often disagree on how to get there and whether a particular innovation (e.g., dark trading, speed bumps, high frequency trading), benefits or harms markets. Ideally, a discussion is evidence-based – but buy-side firms often don’t have the resources to provide the necessary analysis, and, let’s be honest, how often do we see firms produce research that runs counter to their commercial interests? Academics can bring –and have brought!– much-needed clarity to the debate because they are independent, and the Plato Partnership initiative provides an exciting opportunity by pro-actively seeking academic contributions.

What role do you think academia can play in the development of global market structure?

Even though the ultimate goal of the market structure debate is to create a market that fosters the interests of investors and issuers, the discussion sometimes gets sidetracked and circles around granular details and technological issues. My approach, for instance, in my role as a member of the Ontario Security Commission’s Market Structure Advisory Board, is to identify the overarching questions that we need to answer to address a concern. The same applies to good academic research: one asks questions to identify the key practical aspects that drive unexplained market phenomena. In the best case, the answers help everyone involved understand the root causes for disagreements so that, going forward all sides of the debate can find resolutions based on the new common body of knowledge.


A good example is the debate on high-frequency trading: when these fast, hyperactive robo-traders first appeared, there was an strong concern that there was wrong-doing, that markets were harmed. Yet academics soon developed a large body of academic work, both theoretical and empirical (enabled by industry-provided, high quality data). This work shaped our understanding of the role of HFTs in markets, and therefore brought much clarity to the debate. We are now in a better position to identify and assess areas of concern, and we have a higher quality debates on the impact of innovations.

Your co-author presented a paper at the Plato Conference in June. Can you describe how your work contributes to the market structure debate?

In my view, at its core, much of the current debate on trading venues, order types, dark trading and fees is about order flow segmentation, which is the attempt to segment orders into desirable (usually non-directional or balanced) and toxic (single-directional) flow. In 2012, Canada adopted a rule that made liquidity provision in the dark much more expensive. The immediate consequence of the rule was the demise of a “dark” trading venue that had previously managed to syphon off a large chunk of retail order flow from the main market. After the rule change, the bulk of this retail flow moved to a single lit market, a shift that we argue in the paper was predictable. To me, the most interesting finding in the paper is what happened to this lit market when the retail flow was re-introduced: liquidity there improved quite noticeably. So how does this help in the market structure debate? You have to think about in reverse: if market participants develop venues, fees, or trading mechanisms that ultimately aim at drawing retail flow away from the main market, then chances are, market quality is harmed.

Which topics do you believe to be important for the regulatory debate going forward?

Over a time span of less than a year, a parallel universe to the world of mainstream finance has emerged, and this development will likely become highly disruptive to the traditional world of securities issuance and trading.  Hundreds of small tech firms have circumvented traditional means of finance (banks, VCs) and have issued and are preparing to issue digital “tokens” to finance their operations; for all practical purposes, these tokens are financial securities, created on the Bitcoin or Ethereum blockchains, and they now account for billions of dollars in value. The “crypto exchanges” where these tokens trade are entirely unregulated and use minimal market infrastructure: no security depositories, no brokers, and no accounts; settlement is almost instantaneous and the security issuance process, procedurally at least, is dirt-cheap and takes mere minutes to set up. Dealing with the many challenges that this development brings, will require some serious out-of-the box thinking. I don’t believe that the mainstream financial industry is prepared for this disruption, nor do I believe that regulators know how to handle it. And we academics have barely started thinking about the impact of these developments.


Plato Partnership and Imperial College Business School announce intention to establish the European Market Structure research network


Plato Partnership Limited (“Plato Partnership”), a not-for-profit company bringing creative solutions and efficiencies to today’s equity marketplace, has today announced its intention to enter into an agreement with Imperial College Business School to establish and lead a European Market Structure research network.

Plato Partnership Announces New Founder Members

Plato Partnership Limited (“Plato Partnership”), a not-for-profit company bringing creative solutions and efficiencies to today’s equity marketplace, is pleased to announce the participation of SKAGEN AS, Cedar Rock Capital and Jefferies as Founder Members.

They join other major organisations already part of Plato Partnership including Axa Investment Managers, Baillie Gifford, BlackRock, Deutsche Asset Management, Fidelity International, Franklin Templeton Investments, J.P. Morgan, Norges Bank Investment Management, Union Investment, Barclays, Bank of America Merrill Lynch, Citi, Deutsche Bank, Goldman Sachs, Morgan Stanley, and UBS.

Plato Partnership’s development is driven by three key working groups: the Turquoise Plato Expert Group (TPEG), Market Innovator (MI3), and the Plato Strategic Initiatives Group (PSIG).
As founder members, the firms will be afforded a seat on the Plato Partnership board and working groups and enables firms to play a central role in developing and improving equities market structures in Europe.

Mike Bellaro, Plato Partnership Co-Chair and Global Head of Equity Trading, Deutsche Asset Management, said:

“The value that Plato Partnership brings to the market relies heavily on the strength of the firms and individuals that participate in it. The companies that are joining will play a vital role in helping us develop transparency and efficiencies in the market. We hope to continue expanding our membership and increasing the quality of execution, trust and transparency in the industry. This is a very exciting announcement and it is great to see more firms supporting our vision.”

Nej D’jelal, Plato Partnership Co-Chair and Managing Director, Head of Electronic Equities Product, EMEA at Barclays, said:

“Plato Partnership is about the collective effort of the investment community to enhance markets in the interests of end investors. Accordingly, we are delighted to announce the addition of our new members, further underlining market participant appetite to develop and enhance the future of equity markets through Plato Partnership.”

Øyvind Schanke, Chief Executive Officer at SKAGEN AS

“SKAGEN AS’s involvement in Plato Partnership is motivated by our shared ambition to improve the market’s performance and mitigate operating risk on behalf of our clients. The work that Plato Partnership does is helping the industry become more transparent and efficient. We are excited to be part of a body that has already delivered meaningful change and will continue to do so for years to come.”

Yavuz Arikan, Head of Trading and Portfolio Analysis at Cedar Rock Capital

“Cedar Rock’s work with Plato Partnership is a continuation of our commitment to working in the best interests of our clients by reducing operating risk and improving performance. With members from both buy-side and sell-side communities, as well as in the academic space via the MI3 offering, Plato Partnership is uniquely positioned as an organisation to facilitate us achieving this goal.”

Ben Springett, Head of European Electronic and Program Trading at Jefferies

“Jefferies is happy to be part of Plato Partnership. Being able to collaborate with other members of Plato Partnership will help us work towards a goal of increasing efficiencies in the market and improving trading transparency. Working with both buy-side and sell-side firms, along with fostering academic research, Plato Partnership is in a great position to change the way the market operates for the better.”

60 Seconds with… Giovanni Cespa, Professor of Finance, CASS Business School

As an independent observer, what are your thoughts on the Plato Partnership project and their aims more generally?

I am a member of the CEPR, and first heard about the Plato Partnership when together with Imperial College London, it organised its inaugural academic conference in London, last June.

Technological innovation has influenced in a profound way the activity of financial markets over the past twenty years. The dramatic decrease in information processing costs, aided by regulatory intervention, has led an industry that once abided by the monolithic paradigm of the “natural monopoly” to morph into a much more competitive and diverse one. Nowadays, financial instruments contemporaneously trade on different platforms where the rules governing transparency and the market information end-users can access, differ widely.

Such a seismic transformation, has raised a broad range of issues that deserve further investigation. For instance, do we have a clear understanding of how transparency affects market quality and/or the welfare of different market participants? The answer to this type of question is likely to benefit from the interaction between market participants, who see the market from the end-user perspective—with more of a positive angle, and academics who, instead, tend to have more of a normative view. In this respect, the Plato Partnership has the potential to deliver rigorous research that better addresses practical problems.

What role do you think academia can play in the development of global market structure?

Academics can bring rigorous reasoning and modelling techniques that can help articulate the debate in a systematic way, contributing to market development and the Plato Partnership project.

Let me give a couple of examples. Recent microstructure research sees the availability of liquidity as an important measure of market quality, and an objective that exchanges need to pursue, a view that is also shared by regulators and market users. However, liquidity ultimately captures the compensation that intermediaries receive to make the market work, and—abstracting from frictionless market paradigms—it is hard to imagine a real market that is infinitely liquidity.

This begs the question of what is the level of liquidity a market can “reasonably” achieve, and what does such a level depend on. The answer to this question is somewhat complicated, though. For example, for given market structure, a likely, important liquidity “driver” is the willingness of market participants to get involved in trading (How much capital can they commit to this activity? How tolerant are they to the risk that such an activity implies? How risky is their position in the market?). Yet, market structure is by far not given, and, especially in the present environment where financial innovation is ripe, is likely to change, for example as a result of technological innovation. Thus, an additional factor that is likely to impinge on market liquidity is the structure of the exchange industry. This raises a host of new questions that touch upon the industrial organisation of the market. For example, how does competition among exchanges/platforms affect liquidity provision? Is unbridled competition desirable? Alternatively, is it possible that it is somewhat conducive to a suboptimal outcome that damages market participants, for instance because of the likely duplication of investment that entry may imply? Ultimately, an answer to this question can come from the analysis of models that encompass the welfare of “all” market participants: traders, liquidity providers, and exchanges.

In these frameworks, payoffs are well defined so that one can measure how beneficial liquidity provision is for traders, how rewarding it is for the intermediaries who facilitate the trading process, and how profitable it is for the platforms that allow its provision. Furthermore, this type of research can facilitate the role of regulatory intervention.

Another area where debate on market structure is thriving and academics can contribute, is the role of computerised trading. A first batch of empirical results in the literature has suggested that that the advent of computerised intermediation has had a positive impact on liquidity provision. However, a number of “incidents,” the most infamous of which is represented by the May 2010 “Flash-Crash”, have led regulators to question such a benign view.

This has raised a number of important questions. First, can we really single out computerised trading as the culprit of these events? Next, if this is the case, is there a trade-off between market stability, on the one hand, and liquidity, on the other. If so, to what extent can higher liquidity be considered a priority in an environment where sudden liquidity dry ups can, and do occur? This type of questions is again likely to benefit from the interaction between academics and market participants, something that the Plato Partnership has the potential to facilitate.