Market Structure

Since 2006 the U.K.’s Financial Services Authority (FSA) has limited investment manager’s use of dealing commissions to the purchase of trade execution and research services.

In the wake of a string of technological mishaps affecting the financial markets, the SEC recently proposed Regulation SCI to strengthen the controls, policies, and procedures surrounding market technology. Rhodri Preece, CFA, examines the proposal, which would require exchanges, significant alternative trading systems, clearing agencies, and plan processors to meet certain core technology standards.

Based on the results of this week's CFA Institute Financial NewsBrief reader survey, investors' expectations have not been changed by what legislators, parliamentarians, central bankers, or regulators have done in the nearly five years since the failure of Bear, Stearns & Co.

A list of the top 10 most-read blog posts from the Market Integrity Insights blog in 2012.

Although the ASEAN (Association of Southeast Asian Nations) region still goes somewhat unnoticed outside of Asia, these days a lot is brewing for investors in the region.

With the volume of dark liquidity growing by nearly 50% over the past three years to account for approximately a third of total volume, there is a clear shift in the equity market structure away from trading on public exchanges and toward dark, or undisplayed venues.

Over the past decade, the trend toward larger volumes of equity-market transactions taking place away from public exchanges has led to concerns about investor access and competition with the traditional exchanges. In response, CFA Institute has published Dark Pools, Internalization, and Equity Market Quality.

The regulatory response to automated trading is stepping up with various initiatives globally to limit the propensity for errant technology to cause market instability. Such initiatives include tightening up controls over algorithms via more frequent and robust testing, regulatory authorisation and oversight, curbs on unfiltered electronic access to markets (such as by banning “naked” sponsored access), and more sophisticated circuit breakers to halt excessive trading volatility.

The European Commission has published key legislation aimed at enhancing the protection of retail investors, including the Packaged Retail Investment Products (PRIPs) regulation. Agnes Le Thiec, CFA, examines how the PRIPs regulation would benefit investors.

BATS Global Markets recently pulled the plug on its IPO after a computer malfunction caused a mini “flash crash.” Such technological glitches are not new, but they are becoming increasingly common. Rhodri Preece, CFA, examines the lessons we can learn from these events.

The Australian Securities and Investments Commission (ASIC) recently closed its consultation on the Australian equity market structure. The Commission is now considering how best to tackle a range of market structure issues, such as algorithmic and high-frequency trading (HFT), dark pools, price transparency, and liquidity fragmentation.

Rhodri Preece, CFA, director of capital markets policy, and James Allen, CFA, head of capital markets policy, discuss the state of transparency in bond markets and the potential for increased transparency in Europe under revisions to the… READ MORE ›

That’s seemingly the thrust of the NYSE’s plans to establish a “retail liquidity program.” Frustrated with its loss of market share to broker/dealer internalizers and other non-displayed trading centers, the exchange seems to want to play the internalization game… READ MORE ›

Recently, the European Commission commenced its overhaul of securities markets regulation with the publication of the eagerly-awaited revised Markets in Financial Instruments Directive, dubbed “MiFID 2”. Nearly a year in the making, the legislative package puts transparency at… READ MORE ›

In recent weeks, Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) published their regulatory approach to dark liquidity (a.k.a. non-displayed orders) in Canadian equity markets. The announcement came off the back of an earlier… READ MORE ›