Traders speaks with Luke Mauro, Managing Director, Global Head of Operations and Commission Management at Instinet, who won Excellence in Operations Leadership at the 2022 Markets Choice Awards.

What is your reaction to winning the “Excellence in Operations” award at the 2022 Markets Choice Awards?

I’m very honored by this recognition from Markets Media and the MCA editorial committee. I also greatly appreciate that Instinet nominated me for this award. In accepting it, I did so on behalf of the greater Operations Team across the globe. They’ve shown such dedication every day in delivering a seamless experience for clients, especially in the wake of the pandemic, the explosive volumes, and high market volatility we’ve had over the last couple of years. We really see what a team is made of when things are tough – when they have to overcome great challenges. I’m very proud to say that our team not only rose to the occasion, but also exceeded our expectations. So, that’s why I say this is a recognition for them as much as for me. And they were also thrilled by the award, too.

I’ve been with Instinet since the days preceding Order Handling Rules, Decimalization, and Y2K. The world was different then, to say the least. We at Instinet were the plucky pioneers of electronic trading and digitalization. We built out our trading operations, middle office, back office and commission management platforms during a period of great change. There were no roadmaps for that – so we did what all pioneers do – we blazed our own trail. It was exciting, and was a great training ground for developing a culture of practical innovation.

Today, as Global Head of Operations for Instinet, I serve as a member of the firm’s Global Executive Committee. Part of my current focus is on identifying opportunities with a newly-evolving part of our business: Instinet Technology Solutions. This group has grown organically because our clients wanted to tap into the technology and infrastructures we’ve been continuously refining and reinventing for ourselves over decades. What we’ve found is that our middle and back office platforms have the scale and capacity to handle a variety of clients and third parties that are looking to outsource trading operations.

How does a trading firm run operations effectively?

Some may tend to think exclusively about technology when they think about operational efficiency. But in my experience, the real key is achieving the right balance between the people and the technology.

For us, the success and competitive advantage of Instinet’s operational capabilities lies in our “built for purpose” technology, as well as the deep experience and commitment of our employees. I wouldn’t be at this place in my career without the tremendous support I’ve had over the years, and continue to receive, from Instinet management, my peers and particularly my team.

I’d say agility is a key contributor to performance for us. Operations teams across the industry and globe have weathered plenty of challenges over the past few years, not the least of which was managing trading operations and staff remotely during COVID and unprecedented spikes in trading volume. When we add on all of the regulatory complexities, such as the Consolidated Audit Trail (CAT) requirements, the CSDR’s Settlement Discipline Regime, MiFID II, and Brexit, the greatest strength we’ve had has been our ability to be nimble and adaptive.

How can operational effectiveness be improved?

It’s important to embrace new technology and offer clients choices, while still offering them a great base of stability and effectiveness. At Instinet, we’re always committed to innovating and adding value for clients, which means giving them options. The ongoing digital transformation of trading, clearing and settlement operations will continue to yield improvements industry-wide. Instinet will continue to take a leading role in adopting new technologies and processes. I imagine an eventual scenario in which much of the industry uses a T+1 settlement, while a subset of the industry may operate on T+0. A great example of this digitalization trend is the Paxos pilot program we joined as first participants to settle trades on a blockchain. We’re stress testing same-day settlement cycles, because our long-term goal is to always offer our clients more choices, advanced technologies, and greater efficiencies in both their settlement processes as well as time horizons.

With regard to operational effectiveness, it’s likely we’ll see more consolidation. There are some firms that are just not investing, and nowadays, clients have so many venues to go to that if they have an issue with a broker, they just turn that dial off.

The biggest thing to remember is that competition is good – it brings efficiency and reduces the net costs to investors. Instinet has viewed that to be a core part of our mission for over 50 years, and as long as I’m in this seat, we’ll remain committed to doing that every day.