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Screenshot of a breaking news alert e-mail from Q2 2017
Plato Partnership Limited, a not-for-profit company bringing solutions and efficiencies to today’s equity marketplace, announced its intention to enter into a cooperation agreement with LiquidMetrix, an execution specialist and an operating division of Strategic Insight (SI).
Under this new partnership, the two companies will research, design and implement a stronger methodology for assessing block trade performance.
Through this cooperation, Plato will work with the LiquidMetrix research & development team to jointly design and implement a consistent framework for assessing block trade performance. This will enable firms to assess the execution quality achieved by block trading both in absolute and relative terms between different block venues versus other execution options.
MiFID II will have a significant impact on many aspects of trading in Europe. Limits on dark pool trading and the disappearance of current BCN models are likely to drive innovations in how and where trades are executed.
RTS 28 requirements on sell sides and buy sides will focus attention on how effective firms are in sourcing liquidity and achieving best execution for their clients in this new landscape.
Mike Bellaro, Plato Partnership Co-Chair, commented:
If block trading is to become more widely adopted we need a comprehensive and universally accepted framework for measuring block execution quality. This is exactly what we are looking to develop with LiquidMetrix. To date, traditional Transaction Cost Analysis has not done a good job in allowing such relative comparisons to be made. Block trading analysis requires careful risk adjusted measurement of performance to allow fair comparisons with algo trading. TCA often focusses mainly on what is completed, ignoring or side stepping opportunity costs.
We are delighted to be working with Strategic Insight’s LiquidMetrix team to bring a solution to the market. This cooperation again demonstrates our commercial focus and ensuring that we are delivering significant utility for our members and the market as a whole.
Sabine Toulson, LiquidMetrix Co-founder, Strategic Insight, commented:
The LiquidMetrix mission is to provide leading edge analytics for all of the financial services industry including the buy-side, sell-side and trading venues. As regulatory and technological innovations continue to drive changes in market structure, the financial community must continue to adapt in order to provide meaningful best execution reporting.
Block trading appears to be re-emerging as an increasingly viable trading option. At the same time, MiFID II requirements specify the need to justify the different execution strategies and policies used by a firm. There is a clear need for a new generation of meaningful block trading metrics that demonstrate execution quality for the industry. Strategic Insight is pleased to have the privilege of collaborating with the Plato Partnership, and in using LiquidMetrix experts to develop a modern platform that the entire industry can use for effective measurement of block execution quality.