2015 Outlook: Torstein Braaten, TriAct Canada01.05.2015
What were the major themes of your business in 2014?
2014 was ruled by increased emphasis for marketplaces to become more transparent and forthcoming with all industry players. Perhaps on the back of Flash Boys, there was a renewed interest in market structure. Investors’ increasing awareness around best execution, trade analysis, and the desire for transparency was an undeniable trend. At MATCH Now, we continued to focus on ensuring our clients were well-educated on market structure changes, and that they were well-versed on our overarching appeal to the natural investor (especially retail desks that actively seek price improvement). Regulators had a very busy year with their proposed changes to the order protection rules and added attention around studying HFT activity. Canadian markets have been volatile and while the overall equity space experienced a volume lift, particularly in the latter half of 2014, MATCH Now successfully leveraged this volume increase to make 2014 our best year yet. MATCH Now volume was up 64% year-over-year and we effectively doubled 2013 market share. Our ETF initiative also gained momentum, and we now comprise ~6% of the Canadian ETF space. Overall, we closed at a high of 6.3% market share in November 2014, and peaked at 7.5% intraday. We now account for 95% of all dark trading across Canada’s dedicated dark pools, and over 60% of all dark trading in Canada including dark order types on lit venues.
What are your expectations for 2015?
We anticipate a strong start to 2015 given the recent surge in volatility and subsequent uptick in volume. The last twelve months have been rather noisy on the trading front: financial headlines were captured by legal allegations, consolidation and emergence of trading venues, new trading rules, and media portraying the US (and to a lesser extent, Canadian) markets as rigged and unfair. On a macro level, 2014 saw epidemics, geopolitical turmoil, and plummeting energy prices. While the story of 2015 has yet to be written, we can safely say that investors will become increasingly involved and inquisitive in trade execution and that market structure will remain a hot topic.
That being said, we believe the year ahead will be one of change – good, bad, and ugly. We anticipate an exciting, yet challenging, year ahead for Canada as new entrants come aboard and as existing trading venues make adjustments to their models. The good captures marketplaces’ realization that investors need viable business solutions to improve their trade execution. Academic studies also continue to prove that dark trading benefits investors and market quality. The bad can be summed up by saying: ‘things may get worse before they get better.’ Specifically, we believe investors will face additional costs, along with infrastructure and technology challenges, which will lead to a more complex and fragmented market. The ugly captures added competition and the race to win market share ahead of any regulatory changes. Latency, speed bumps, segmentation, protected markets, anti-avoidance rules, and technological infrastructure will lead to challenges for routing, as it relates to effectively achieving best execution and best price.
At MATCH Now, we anticipate continued momentum in 2015 on the back of a strong 2014. We believe our new platform enhancements and innovations will serve the investor community better than the segmentation, complication, and ‘speed bumps’ that are currently monopolizing the industry’s time and attention. We believe our design, our long-standing commitment to simplicity and transparency, our ‘partnership with industry’ approach to doing business, and our suite of new platform enhancements will drive us to reach new market share highs.