Ali Pichvai, CEO Quod Financial, comments on MIFID’s second anniversary

29 October 2009

“With the arrival of Year 3 of MIFID, financial institutions are meeting deadlines on the regulation side, but we see a continuing lack of preparedness among market players in terms of smart order routing and best execution technology. Many financial institutions have not yet taken advantage of the opportunities that new technologies offer. With the interest of regulators in dark pools and other transparency issues, information control is going to become another important issue. The MiFID-driven growth of MTFs and corresponding drop in fees from national exchanges further complicates the landscape, reinforcing the need for smarter trading technology that increases speed and volume while taking optimal advantage of the various sources of liquidity.

“MiFID creates intense operational challenges, as does Reg NMS in the US. At Quod Financial, we have been refining our adaptive trading technology to address the requirements of Year 3, and our customers are ready now. MiFID has been a catalyst for market restructuring, but market changes will continue to cascade as the various players seek new advantages and profits. Technology, as always, is another catalyst, as well as solution. What we see now is that the reliance on sweeping liquidity venues in the first year has shifted to a greater reliance on spraying. This is one of the details of change, but a larger issue that is emerging is the need to address fragmentation with internalization and crossing engines to control information leakage and increase profits."

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