In the European trading and equity business, the more things change, the more they stay the same.
The biggest trend in trading and execution, according to industry leaders, remains the convergence of high-touch and electronic trading, amid a push for automation and algorithmic trading by the buy-side.
“It’s been ongoing for years but definitely an accelerating trend as more and more client desks become automated and quantitative,” said Antoine Bisson, head of European execution for Exane BNP Paribas.
Couple that with 2018’s update to the Markets in Financial Instruments Directive and the Covid-19 pandemic — both of which continue to significantly impact the relationship between sell-side firms and their clients — and the result is Institutional Investor’s All-Europe Equity Trading Team.
For the first time since 2018, II polled traders of European equities and asked them to rank brokers on various attributes for execution and trading services. These scores were aggregated to recognize the best overall providers across high-touch, electronic, portfolio/program, and Delta One/ETF trading. This year’s survey obtained responses from more than 140 traders and investment professionals at 114 firms to create a top 10 leaderboard of European providers.
According to Bisson, “the ability to tailor the execution experience to clients, as opposed to the one-size-fits-all approach has led to more differentiation over the last few years.”
This approach propelled Exane BNP Paribas to the No. 1 spot of this year’s ranking. UBS took second place overall, followed by Morgan Stanley placed third and Goldman Sachs in fourth place. Kepler Cheuvreux rounded out the top five.
UBS topped portfolio/program trading, followed by Exane BNP in second and JPMorgan Chase & Co. in third. Exane solidified its win by coming in first in high-touch and electronic trading. BofA Securities took first in Delta One/ETF trading.
“Our 2020 was one of the most successful for our franchise despite the challenges of the pandemic,” Bisson said.
This included deciphering how to run a trading floor in a mostly virtual environment. “Like many parts of the finance industry, the trading biz has never been run remotely until the pandemic, and we were not sure how things would pan out,” he added. “At the peak of the crisis — and there have been many — we minimized the on-site presence by relying on new communication technology to keep people connected. We were never able to completely empty the office. I think one of the benefits is that we have always had a seasoned equities trading team. We didn’t suffer from the juniorization of the business.”
While things at the firm are as close to “business as usual” as they have been for some time, being prepared for any scenario remains paramount. Workforces may once again have to revert to remote at different times and geographies so flexibility will be the name of the game going forward.
While MiFID and Covid continue to transform the way sell-side firms and their buy-side clients do business, one seems more permanent while the other will hopefully be circumstantial, according to Bisson.
“MiFID had some significant impacts,” he said. “The difference is that MiFID II made some fundamental changes to trading [such as] reporting and more qualitative assessments, whereas most of the Covid changes are likely to be temporary for execution.”
While trading will remain a hard desk job with demanding hours “at its heart,” according to Bisson, there is some change afoot. “Covid has taught us be more flexible and this should improve the work-life balance of trading staff for both the sell side and buy side,” he said. “Now we know that it is possible to work from home when need be.”
Bisson believes his team differentiated themselves this year due to a focus on the platform and its people. “We really focused on customizing the service to our clients both from a technology and service standpoint,” he said. “We have also focused on consultancy to improve execution and improve trading performance for our clients.”
In mid-July, BNP Paribas completed its acquisition of Exane after its 17-year partnership. Part of the French investment bank’s strategy is to continue to bolster its position in European equities.
It follows the firm’s 2019 deal to absorb the global prime finance and electronic equities client portfolio of Deutsche Bank, leading to a bigger balance sheet and unique liquidity for its clients, according to Bisson. “This is a particularly exciting time,” Bisson added.