As the stock market continues to rise this year, investors
are increasingly concerned that their ability to sell shares
will vanish, according to firms listed in Institutional
Investors 2017 All-America Trading Team rankings.
What people are concerned about more and more is where
has the liquidity gone, said Bill Bell, the head of
electronic trading at Jefferies. Theres a lack of
liquidity in the marketplace for people to get things
Jefferies ranked second this year in electronic trading for
investors with more than $30 million, behind Morgan Stanley,
and ahead of JPMorgan Chase & Co. at No. 3, according to
IIs annual survey of buy-side traders, market structure
analysts and other financial professionals. More than 400
professionals cast their vote identifying which firms provide
the best electronic, high-touch and portfolio trading
strategies. Morgan Stanley earned the top ranking in high-touch
trading strategy, followed by Goldman Sachs Group and JPMorgan.
Goldman Sachs was No. 1 in portfolio trading, followed by
Credit Suisse Group and Bank of America Merrill Lynch.
U.S. stock markets have rallied since the surprise election
of U.S. President Donald Trump in November, with the Standard
& Poors 500 Index rising about 13 percent through May
5. One of the biggest challenges investors are facing as stock
prices rise is finding buyers for shares theyre looking
to unload, according to Jefferies and KCG and Instinet.
We live in a world where the ability to capture
liquidity across the street is really important, said
Mark Govoni, president of U.S. brokerage at Instinet, which
placed ninth in IIs ranking of portfolio trading.
Weve recently done some work on what were
calling our tactics engine. That allows us to efficiently
capture more liquidity across the street.
Another area of concern for trading firms is the second
phase of Markets in Financial Instruments Directive, known as
MiFID II, which is European Union legislation that aims to
increase transparency in how financial-service firms collect
fees. The new rules take effect in January.
When I think about the current landscape in electronic
trading, the first thing I think about is transparency,
said Bill Wiley, chief operating officer of client management
at KCG, which ranks among the top 20 II-ranked firms in
electronic trading, portfolio trading and high-touch trading.
Its not just about where were routing orders.
Traders want to understand at a detailed level how our algos
work and why were making the decisions were
Govoni agreed that this is important to investors.
Much of our time and focus and client interaction over
the past six to ten months have been MiFID II
discussions, he said. There needs to be
transparency around payments for research. We think being a
smaller and higher quality boutique will help us to monetize