Profile | Mark Hemsley We are also exploring the exchange traded
funds market in greater detail. We are looking at how we can create a more liquid pan-European ETF market by using trade order routing techniques that are well established in the equities markets. Our pan-European low cost offering is well placed to prosper in low volume environments and is highly scalable as volumes increase.
What impact do you think regulation such as MiFID II and the Financial Transaction Tax will have? MiFID I was designed for competitive reasons but MiFID II is much more political with the focus being on, among other things, dark trading and high frequency trading. You have to keep negotiating and ensure that when it comes to dark trading that regulators are making changes that are creating a good market infrastructure. As for the FTT, there is a lot of complexity and it
be achieved by the reduction of membership fees, IT and connectivity expenses. We are strong supporters of the open-access or horizontal model and we want to ensure that it continues.
Will you attempt going back to the market? If not what are the future plans? We keep our eye on the market but a BATs IPO is not a main focus. We are finishing off the RIE process and as I mentioned hoping to increase our customer base. We started by focusing on the biggest stocks and customers and now we are looking at further developing our retail, regional and smaller customer base across Europe. We are also looking at the depositary receipt business, which we launched around three years ago. We had around 2% to 4% of the market but we have doubled our share in the past year to 8.1% through May. Russian companies are a big part of the
market and while there is a push in the country to have them list on their local markets due to the changes on the Moscow Stock Exchange and introduction of a central securities depositary. There is still demand to trade in depository receipts in WesternEurope.
Best Execution | Summer 2013
is a worrying development for exchanges. Although volumes have bounced back after the introduction of an FTT in France, Italy’s levy has proved to be disruptive. The proposed EU FTT under discussion will also
prove damaging to the equity markets at a time when regulators are looking to these markets to raise money for small and medium size companies. If it goes through it will only make it more expensive to do business. I don’t think we will see anything FTT zone wide until well after next January, but even the discussions are putting trading firms off the European market. I hope common sense will prevail.
Looking ahead, what do you see as the biggest challenges? Probably the biggest challenge to our industry is the uncertainty in the global economy. If the US economy continues to improve that could counter the challenges facing the Eurozone. If we see a notable rise in bond yields, that in turn could help lift equity volumes. Separately, the uncertain regulatory environment remains a cloud for all investors. Until there is clarity on looming regulatory changes, all investors are disadvantaged. n
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