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Market Structure Views
Introduction – Market Microstructure
Today's financial markets are full of opportunities that have been created by the evolution of technology and the opening of competition. Exchanges and alternative trading venues such as those established by Chi-X have reduced costs, provided better services and given investors a wide range of new tools. But while there is no doubt that today’s financial markets bring many significant benefits to the investor, they also form an increasingly complex inter-linked environment. Investors and their brokers now have many different execution tools, from direct market access to a wide array of algorithms, crossing networks and competing venues. The concept of best execution is driving both the tools and the decision making processes that are used by investors. But what constitutes ‘best’ can differ not only for each investor, but also order-by-order. Regulators have a key part to play in encouraging competition, and the many benefits that it brings to the market, whilst maintaining a fair and effective market structure. A larger challenge will be to educate the politicians and other policy makers about the positive role that market practices, such as electronic block crossing, short selling and high-frequency trading can bring to the investor. Over the coming months, we hope to publish our thoughts on a number of topics around market microstructure. We also welcome any feedback, comments and questions you might have, and will endeavour to respond. .jpg){kind=small} |
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