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Profile | Matthew Cousens & James Hilton


with relevant tweaks to accommodate the local markets, and then each region will work with local clients to develop custom solutions. Those custom solutions can of course be shared globally. In Europe, we do have a high number of customised strategies but there are also lots of clients who just want tweaks to their trading strategies instead of large-scale customisations.


Matthew Cousens


What do you see as the impact of regulation in general? Hilton: Regulation is difficult, costly and time consuming but we recognise as a bank that certain events have to be addressed. It needs though to be implemented with due thought and consideration. For example, areas such as the proposed regulation of dark pools under MiFID II need to be improved. The general consensus is that the advent of dark pools has been beneficial to the buy-sides ability to trade and they are concerned with the talk of regulating them.


Do you think that best execution has improved under MiFID? Cousens: MiFID started the process of competition and this has certainly driven down costs and tightened spreads. We have also seen an increase in resources within the buyside to study specific trading details and data, yet the definition of Best Execution is still undefined – it is essentially still just a policy – and clients have different views on how to achieve best execution.


Best Execution understands that the strategy has been to keep AES as standardised as possible around the world, with algorithms customised for each country by local teams and quant developers. Can you expand on this? Hilton: Yes that has always been our philosophy – we keep the headline strategies very similar,


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Overall how have your clients trading patterns changed over the past year? Liquidity is key in these markets. We have seen an increase in the number of clients using liquidity seeking strategies and using our Crossfinder Plus algorithm that accesses multiple dark pools, including Crossfinder (which is the world’s largest dark pool according to the Rosenblatt Survey May 2012, TABB Group LiquidityMatrix May 2012).


What is the main differentiator from your competitor’s platforms and how do you keep the edge? Hilton: I think one of the key differentiators is our experience. We have been doing this for the past 12 years and have built a wealth of experience. We also see ourselves as algo specialists. It is difficult business and in today’s environment, the barriers to entry are high. You cannot operate this business on a shoestring and it is important to be able to make significant investments in technology and resources. We are already seeing some firms withdraw from the business or they are sharing the cost with other trading desks.


Do you see volumes returning anytime soon? Hilton and Cousens: Quantitative easing and other measures will create short-term volume spikes but there will be more bumps in the long term. No one is yet convinced that sustainable volumes will come back any time soon nor do they expect to see a sudden sizeable seismic shift in volumes in Europe. The other issue is that the mix of traders is different. There is a much higher percentage of quant business and much less of the real fundamental trader and that also has had an impact. ■


Best Execution | Autumn 2012


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