3 December 2014

Co-Authors

Anish Puaar

Associate    

Justin Schack

Managing Director    

Akhil Bhatia

Director    

Andrew Upward

Vice President    

Rosenblatt Securities Inc.    
New York +1 212 607 3100    

TRADING TALK
Rosenblatt's Market Structure News Digest (European Edition)

Buyside Seeks Standards for Dark Pool Scrutiny
— Financial News

The Investment Management Association, Europe's largest buyside trade body, is in the early stages of an initiative to help dealing desks scrutinize the trading practices of their brokers, following several high-profile US regulatory investigations into the operation of bank-owned dark pools.

Our Take: Given the complexity and conflicts of interest inherent in modern market structure, it’s more important than ever for institutional investors to collect and analyze data showing how brokers route and execute orders. The US already has taken steps toward standardizing this process, with SIFMA, the ICI and MFA teaming up to develop an order-routing disclosure template (we’re proud to have contributed to this initiative). The three trade bodies hope the SEC will adopt the template as part of a soon-to-be proposed rule mandating that brokers disclose routing and execution data to institutional clients. It remains to be seen whether European regulators would take any IMA-AFME template into consideration. In any case, the focus on best execution in Europe is growing. The European Securities and Markets Authority is considering changes to best execution as part of its work on MiFID II, while the UK Financial Conduct Authority’s best-execution review from earlier this year targets an improvement in sell-side practices.

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