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Webcast: Electronic Trading

Speaker: Dr Jamie Walton

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A course on this topic is available in Singapore, London and New York

Webcast Agenda


  • What is electronic trading?
  • Growth of electronic trading
  • Market participants 
  • Principal vs agency 
  • Trading venues 
    • Exchanges, ECNs, Dark Pools
  • Execution order types 
  • Algorithmic execution
     

Learning Outcomes


  • Understand what electronic trading encompasses 
  • Learn the differences between Algorithmic Trading and High Frequency Trading 
  • Get an overview of different styles of trading venues 
  • See an introduction to algorithmic execution
     

Q&A


1. How can electronic trading help end-users of financial instruments?
A. The main benefits of electronic trading are that it allows greater price transparency, lower transaction costs and lower execution and settlement costs. End-users can have access to a larger market place with more liquidity providers. Additionally, the use of algorithms allows clients to execute in a manner which matches their risk profile whether their target is certainty of execution or low pricing.

2. How are regulations going to affect the future of electronic trading?
A. The LIBOR and FX fixing scandals have created a desire for the transparency that electronic trading and algorithmic execution can provide, encouraging clients to move to this style of trading in the Fixed Income markets. With regulations such as Dodd-Frank and MiFID, we are seeing a move to greater transparency for pricing and trading and greater access to electronic trading for clients. The need for transparency is encouraging the migration of trading to exchanges, ECNs (Electronic Communication Networks) and SEFs (Swap Exchange Facilities). MiFID has specific regulations designed to encourage liquid trading of standard size instruments with quick publication of traded prices. Additionally, MiFID requires financial firms to register as HFTs under a broad definition and has specific additional reporting requirements for this activity.

3. What is the interaction between voice trading and electronic trading today?
A. For most market-making firms, smaller trades on liquid instruments are usually handled electronically. This leaves voice traders to focus on larger tickets and less liquid instruments, where information leakage and market impact are more significant issues. Algorithmic trading has seen more clients move to this style of trading rather than interacting with a voice desk, though on the other side, voice traders may also use algorithmic trading as a tool to manage their risk. It is possible for both voice and electronic trading to co-exist and play to their relative strengths to help service clients.

4. In which areas do we expect to see growth in e-trading next?
A. As the opportunities for HFT diminish in established markets, we expect to see growth in more complex instruments, especially options. Improved liquidity and more access to electronic venues create a virtuous cycle enabling rapid growth in trading. Additionally, these derivatives will benefit from access to electronic trading in the underlying instruments used to efficiently hedge their risk.

Thank you to those attendees who submitted their questions.


LFS offers the 2-day 'Electronic Trading and Algorithmic Execution' programme with Dr Jamie Walton in LondonNew York and Singapore.

To find out more, click on the location links above or contact us at advisor@londonfs.com

Are you interested in running our public courses in-house? Contact our in-house team to discuss further.


Why travel? Many clients are already attending our courses from the convenience of their home or office with LFS's state-of-the-art remote learning platform: LFS Live