When you look at the institutional space, it was all really about workflow and global consistency, but when you look at the broader global landscape, there is a lack of competition in block trading. That’s according to Mehmet Kinak, Global Head of Systematic Trading and Market Structure at T. Rowe Price.
Speaking on the STA Trading Views podcast, which focused on Cboe’s recent acquisition of BIDS Trading, Kinak said: “Having someone like Cboe/BIDS be able to enter into that space with their technology prowess is very beneficial for us.”
The innovation continues, both in the exchange and the ATS space, according to Kinak.
“When you look at other regions across the globe, and even when you look across multi asset, there’s a need for that innovation. It’s difficult for smaller players to come into the space and really gain traction.”
“So when you see someone like Cboe and BIDS come together, that’s great, because they automatically have the scale, they have the expertise, they know how to run both an exchange and a block-crossing network,” he added.
In January, Cboe acquired BIDS Trading, a registered broker-dealer and the operator of the BIDS Alternative Trading System (ATS), the largest block-trading ATS by volume in the U.S.
Bryan Harkins, President at BIDS Trading, said that the U.S. equity market continues to be the one where the innovation and competition is as lively as ever.
He believes that there are more exchanges coming, both options and equities.
“The ATS space probably reached a little bit of a maturity point over the last few years, but with even new entrants with different types of ways of matching trades, the innovation and competition is as lively as ever,” he said.
“I’m trying to bring some of those perspectives from years on the exchange side, to see how I can really try to improve outcomes on the institutional side, which continues to go through some innovation.”
Commenting on the aquisition, Harkins said that the BIDS customers trade globally and they want a global product offering.
“The Cboe acquisitions of MATCHNow [Canadian ATS] and Chi-X, and BIDS – all fit together. We’re bringing BIDS to Canada to partner with our colleagues at MATCHNow in early next year; we’re already laying the foundation to bring BIDS to Australia, to Japan and to other countries,” he said.
“It’s our vision, and it’s my vision, to make BIDS a global institutional platform where we can deliver block trading capabilities to all the major countries that the asset managers want to invest in,” he stressed.
When asked what he wants to achieve in a year, Harkins said: “I want to improve liquidity outcomes. It’s been a block venue, but liquidity and sourcing liquidity always evolves. And by listening to customers, hopefully I can improve outcomes for them.”
Kinak added that he “loves the improved outcomes answer”, because that’s ultimately what they are striving for when they engage with ATSs.
“It’s difficult from a workflow perspective, both on the technology side, but also on the data side. There’s definitely a need for some competition in certain areas,” he said.
“I think equities has always been the leader in it as far as innovation, but some things work better in a bilateral engagement. I’m going to take some things we’ve learned from fixed income, but they can take some of those protocols and apply them very quickly for the BIDS framework, potentially, whether it’s ETFs or trading equities through RFQ models, that would be something that would really help our workflow and give us an alternative way of engaging with certain market participants.”
“It’s a lot to do in a year, but hopefully, they’re moving in that direction, kind of helping improve that landscape for us,” he said.
Kinak added: “Ultimately, I don’t want to have 52 places to have to go and try to find liquidity and try to find niche types of engagements when I can do it all in one central place that I trust, that I’m comfortable with, that I understand how to utilize and then be able to find customization within there that works for my type of workflow or my type of order flow.”
