Named Aquis VWAP Match, the new service will initially launch in Q1. It will use conditional indication of interests (IOIs) and use a VWAP period of five minutes.

Members will be able to submit IOIs at a volume weighted price using all the major reference markets for that calculation.

“Once both parties agree to firm up, that will trigger the VWAP period,” Aquis Exchange’s head of sales, Sakeena Lalljee, tells The TRADE. “At the end of that period, that’s when the volume weighted average price will be known based on lit trades that have taken place in that window.”

The new service will have the market identifier code (MIC) AVXE in the UK and AVEU in Europe and volumes will be printed under the off-book on-exchange bucket.

Read more – Aquis Markets unveils conditional order functionality on UK and EU platforms

“It’s a very important thing for us to have distinct codes because feedback from the market is that people want to be able to distinguish between where these trades are happening in that off-book on-exchange space,” adds Lalljee.

In terms of regulatory approvals, the service has received a non-objection from the UK’s Financial Conduct Authority (FCA) and Aquis Exchange is in the process of working with regulators in Europe.

It is set to initially cover a stock universe of about 400-500 liquid names, in order to provide a more mindful and less “broad-brush” approach to roll-out, Lalljee says.

“We’ve looked at the stocks where there is the greatest demand from our clients to use this functionality,” she explains. “That’s what made most sense for us and what we think makes sense for the design of this product.”

The service will rival that of competitor Cboe which launched its Cboe BIDS VWAP X offering in the UK in October, as revealed by The TRADE. Cboe’s European iteration is still awaiting regulatory approval by EU regulators, The TRADE understands.

When asked why Aquis had opted to launch this service now, Lalljee confirmed that several factors had fed into the exchange’s decision, namely the continued growth of passive investment, increasing client focus on latency and the layered development of other linked products that the exchange had launched in the last year.

Read more – Aquis Exchange relaxes eight-year ban on proprietary trading firms

“It’s [VWAP Match] a mechanism that allows people to smooth out volatility in prices or to trade at a forward-looking price,” she says. “It makes sense right now on the back of other things that we’ve been doing in the past few years. We’ve already had our benchmark cross trade capture report service live for a few years now. That allows members to bring pre-agreed trades that they’ve matched themselves onto a lit exchange.

“We launched conditional orders at the start of this year and Aquis VWAP Match allows us to bring elements of both those things together. It’s quite a natural evolution of what we do. In terms of USPs, we made the rule change on our lit book towards the end of last year and there’s an element of that that we’re bringing into VWAP Match as well.”

Aquis relaxed its eight-year ban on proprietary trading firms at the end of last year. As part of the rule change, liquidity providers were given a choice as to whether they would like to have their orders open for anyone to trade with – including prop firms – or whether to keep them limited to client facilitating flow only.

The VWAP Match venue set to go live in Q1 will flip this rule, Lalljee says.

“It will give broker members and client facing members the option of whether they only want to trade with other types of flow like this or whether they are open for anyone to trade with their orders,” she explains.

The post Aquis VWAP Match service set to go live in Q1 appeared first on The TRADE.

The panel is aimed at being a “critical friend” to the FCA in a bid to ensure the watchdog’s policies “maintain and advance” London’s position as an international financial centre. 

The main topics of focus of the panel include the major macroeconomic and geopolitical landscape, the future regulatory regime, FCA transformation, crypto assets, ESG, diversity and inclusion and private markets.

Haynes joins participants from across the major sectors of the UK wholesale and securities markets on the panel. Hailing from Latham & Watkins, Amundi UK, the London Stock Exchange, Peel Hunt, Citi, and Boards of the Capeview Azri Funds.

Morgan Stanley’s head of EMEA and chief executive Clare Woodman heads up the panel as chair.

 “The Panel is an independent statutory body, set up to provide advice and challenge from the point of view of financial market participants, and in order to provide input to the FCA to help it in meeting its strategic and operational objectives,” Aquis Exchange said in a statement on social media.

“Panel members are senior level industry representatives from the UK’s wholesale and securities markets and are formally appointed by the FCA Board. With his 47 years’ experience of financial markets along with his strong desire to innovate capital markets and the exchange industry, we have no doubt that Alasdair will be a valuable contributor to the panel. Congratulations Alasdair!”

The post Alasdair Haynes latest to join FCA panel aimed at fortifying the City appeared first on The TRADE.

Adrian Ip

Aquis Technologies is the Aquis Exchange’s software and technology division, and has been mandated to modernise Colombia’s government bond market.

Adrian Ip, chief strategy officer at Aquis Exchange, said: “The choice of Aquis Technologies demonstrates its expertise and commitment to enhancing financial markets through innovative solutions, and its proven track-record in delivering high-performance trading solutions. 

“We look forward to working closely with Banco de la República to deliver a market-leading solution that will benefit the Colombian economy and its participants while also strengthening Aquis’ offering in the fixed income space.” 

Specifically, the focus will be on enhancements to efficiency, transparency and accessibility, with Aquis Technologies providing the central bank with its low latency matching engine as well as its integrated market surveillance solution.

In addition, Aquis will provide the front-end trading user interface for users to interact with the market. 

George Hodgson, ambassador to Colombia commented: “Congratulations to Aquis Technologies and Banco de la República on this important new relationship. The UK’s fintech ecosystem, innovation and capital markets are world-leading, and it’s great to see that experience and expertise at work in Colombia, fostering a more dynamic, resilient and productive government bond market.”

The post Aquis Technologies wins contract to build new exchange for Colombian government bond market appeared first on The TRADE.

According to a member notice distributed on Friday 1 March, members on both Aquis Exchange and Aquis Exchange Europe will have to pay the same monthly rate as non-members for non-displayed data effective 1 June 2024. Non-display and terminal fees are now applicable to trading members, the notice confirmed.

Members in the “basic subscription tier”, excluding AQSE broker membership, will be expected to pay £1,250 per month. All other members, excluding AQSE broker membership, will have to pay £2,500 per month.

Ongoing access to historical market data will be subject to a monthly fee of £500, said Aquis, and members’ terminal fees will be charged as the same rate as non-members.

Trading fees, subscriptions, and message tiers remain unchanged, The TRADE understands.

Aquis declined to comment.

The decision is not an unexpected one. Market data revenues for 2023 were up 23% to £3.7 million in comparison with 2022 according to the venue’s end of year results, helping to boost net revenue 12% for the year to £22.6 million.

Aquis chief executive Alasdair Haynes has signalled to the potential for a decision around data charges for members in recent years. Speaking to The TRADE regarding Aquis’ 2021 full year results, Haynes said he would never say never when asked if the firm had any plans to begin charging for market data.

Marking its tenth anniversary last year, Aquis Exchange has cemented itself as direct competitor to the likes of Cboe and the London Stock Exchange Group’s (LSEG) MTF, Turquoise. It now accounts for roughly 5-6% of European trading volumes.

Turquoise and Cboe charge trading members roughly £1,600 and £3,600 for their non-displayed market data feeds, respectively.

The exchange operator has diversified its business by expanding its dark pool acquired from UBS in March 2022, Aquis Matching Pool (AMP), and its alternative closing auction mechanism, Market at Close (MaC). Most recently the exchange launched conditional and dark to lit sweep orders on its dark pool.

Friday’s changes to market data fees is the second reversal decision by Aquis in the last few months after it also moved to scrap its previous eight-year ban on proprietary trading firms in September last year.

Speaking to The TRADE at the time of the decision, Aquis’ Haynes said it was time for the exchange to reflect on its various offerings brought to market by its inception over 10 years ago.

The post Aquis set to begin charging members for non-displayed data after 10 years of no fees appeared first on The TRADE.

Former head of market services and digital at Euronext, Eglantine Desautel, has been selected to head up the European consolidated tape efforts. Desautel has been selected as chief executive officer of EuroCTP – the European initiative to establish a consolidated tape in Europe. Desautel takes up the role after over a decade with Euronext, serving most recently as its head of market services and digital, as well as previously serving as head of its Optiq programme. She originally joined NYSE Euronext in 2011 as its deputy chief of staff to the president and deputy chief executive.

Adrian Ip has been named chief strategy officer at Aquis Exchange, having most recently served as managing director at Aquis Technologies. Ip joined the exchange back in 2017, initially as director of product management & technology sales – a role he held until May 2022. He has previously held senior roles across various businesses, including: Wccftech, FireDrake Consulting, Thomson Reuters, and Horizon Software.

Trading Technologies (TT) made three new appointments to its senior leadership team, including chief operating officer; executive vice president of fixed income; and executive vice president of futures and options – all of which will join the firm on 1 January 2024. Justin Llewellyn-Jones has been appointed chief operating officer, joining from Broadridge where he most recently served as chief product officer and head of capital markets, North America (equities, FX and derivatives). Meanwhile, Christopher Heffernan has been appointed executive vice president of fixed income, bringing over two decades worth of experience in fixed income sales and trading, business development and leadership roles. Heffernan will join from Flow Traders, where he has been head of fixed income sales since 2019. Elsewhere, Alun Green will join TT as executive vice president of futures and options, responsible for expanding the firm’s core futures and options franchise. Green joins from Fidelity Information Service (FIS), where he served as managing director, derivatives utility for the past eight years, following the firm’s acquisition of SunGard in 2015.

Dariush Mirfendereski has been appointed head of inflation trading as part of MUFG’s rates trading team. In his new role, he will be responsible for “enhancing overall product capability and expanding MUFG’s financial institutions business with a focus on distributing risk to end users”. Mirfendereski has an extensive career history in the inflation trading sphere and joins MUFG after most recently heading up the division globally at HSBC for nearly 10 years until 2022. Previously he spent seven and a half years at UBS Investment Bank as global head of inflation linked trading and eight years at Barclays as head of inflation derivatives trading.

The post People Moves Monday: Berenberg, EuroCTP, Aquis Exchange and more… appeared first on The TRADE.

Ip joined the exchange back in 2017, initially as director of product management & technology sales – a role he held until May 2022. 

Read more: Aquis hires from within to replace retiring chief operating officer Jonathan Clelland

He has previously held senior roles across various businesses, including: Wccftech, FireDrake Consulting, Thomson Reuters, and Horizon Software.

Last month, the Aquis Stock Exchange became the first recognised investment exchange (RIE) to run a cloud-based matching engine, having achieved a full migration.

Speaking to The TRADE at the time of the announcement, Ip, said: “We are pleased to be the first regulated exchange in a major jurisdiction to adopt pure cloud for the matching engine, but we fully expect to see other exchanges follow suit.

“The wealth of benefits provided by the cloud, including its scalable capacity, infrastructural resilience and cost efficiency savings make migration to the cloud a compelling alternative to traditional on-premise solutions.”

The post Aquis Exchange names new chief strategy officer appeared first on The TRADE.

Upwards of 30% of volumes now take place in the Closing Auction in Europe. This Editors’ Choice category – which is new to Leaders in Trading 2023 – is designed to celebrate those venues most committed to innovating the final portion of the trading day to help their clients meet the new demands of the market as this trend continues to develop.

Among the key players in this landscape, The TRADE has selected Aquis Exchange, Cboe Global Markets, SIX Swiss Exchange, and LSEG’s Turquoise for the 2023 shortlist, following various individual achievements over the last 12 months.

Aquis Exchange

Aquis Market at Close has gained significant traction over the course of the last 12 months, now operating in 14 markets and representing 5% of all value traded across Europe in the Close. It is now the largest alternative closing auction mechanism in Europe. 

Aquis’ MaC operates according to a sequential four-phase execution process. According to the exchange, MaC minimises user risk by rejecting or cancelling orders for a stock if the market-of-listing auction for that stock is extended or cancelled. While clearing and settlement on the mechanism takes place in the same way as other executions on Aquis, members can also choose to enable clearing suppression for trades matched against themselves.

In the past year, Aquis added a third client to the MaC and launched a new pricing model aimed at giving members the option to trade at 0.1bps. “This opens up the offering to the wider market, with particular appeal for smaller firms,” the venue confirmed. As an alternative to the primary exchanges, the MaC brings greater competition to the closing auction sphere. The venue claims that clients save 80% of the costs of trading in the close on the primary when using the MaC.

Cboe Global Markets

Launched in Summer 2020, Cboe Closing Cross (3C) is a mechanism aimed at allowing traders to continue trading after market close in Pan-European markets for a 25-minute window. It’s designed as an alternative to closing auctions which have continued to surge in popularity, particularly in Europe, in recent years.

Cboe Closing Cross allows members to enter limit orders into frequent or periodic auctions that run every 15 seconds. The system claims to avoid the complexity and costs associated with other end of day trading sessions, instead offering a “one stop solution for customers looking to execute their post close trading activities across 18 European markets.”

Unlike other closing mechanisms available it does not utilise order lock ins, allowing for greater flexibility around cancellation at any time which reduces risk for users. It also boasts full order book transparency including pre-trade in its data feed and indicative crossing summaries, meaning all market participants can see in price and size or quantity in real-time for all price levels that are predicted to execute in the cross.

In the US, Cboe has a separate alternative to primary market closing auctions and off-exchange venues for execution of Market-On-Close (MOC) orders, named Cboe Market Close (CMC). Also launched in 2020, members can route MOC orders to CMC, where they are pre-matched with other MOC orders at 3:49 pm Eastern Time. CMC will publish its matched shares following the cut-off time. The trades are then executed when the official closing price is published, saving participants from paying closing auction fees charged by the primary listing market on orders that are not price forming.

SIX Swiss Exchange

SIX Swiss Exchange launched a new functionality to protect asset managers from market impact when executing large orders at the Close, in April. Named the Closing Auction Volume Discovery (AVD), the new functionality is built on SIX’s dark pool SwissAtMid and has a hidden order type that supports discrete submission of liquidity into the auction that was previously withheld or place on alternative venues. The new functionality brings the hidden liquidity into the SIX Swiss Exchange order book where it’s executed if it’s flagged.

This liquidity AVD automatically checks whether there is a buyer on the other side of the market that wants to buy or sell the shares. If a match is found at the closing price, the two counterparties will be automatically matched without impacting the closing price. If a match is not found then there is no trade, but the order is still never disclosed to the market.

The exchange claims the new offering enhances speed of execution, meaning firms can now execute in one session as opposed to taking four or five days to unwind. Speaking to The TRADE at TradeTech Europe 2023 Simon Mason, head of equity products for UK and Ireland at SIX, said the new dark order is designed to help buy-side users minimise their market impact while also still making the best of the Closing Auction.

Turquoise

Launched in 2020 as part of a collaboration between the London Stock Exchange Group and not-for-profit group Plato Partnership, Turquoise Plato Trade At Last is a mechanism whereby investors can seek further liquidity following the closing auction of LSEG’s primary market – or the relevant European primary market for their securities.

The Trade At Last mechanism allows traders to submit firm and conditional orders for an additional ten minutes after the closing auction has completed its price formation process and published the official closing price at 4.35 pm.

This is done via a dark undisclosed execution channel. “We are able to do this whilst respecting the necessary price formation process of the primary venue,” the exchange group confirmed. Turquoise Plato Trade At Last recorded the most active day of the year so far on 20 April with €5.4mn traded through the functionality and recorded its second largest ever trade on 14 August. In H1 2023, over €53 million (single) were executed on Turquoise Plato Trade at Last, 47% higher than the total value traded in the whole of 2022.

The post Leaders in Trading 2023: Meet the nominees for…Best Innovation at the Close appeared first on The TRADE.

The relaxation which was communicated to clients on Tuesday before market open, is set to come into effect in October, subject to regulatory non-objection. The decision follows member demand for more choice around interacting with non-client proprietary trading firms, Aquis said in a statement.

This is a relaxation of the rule as opposed to a removal. Member firms will be able to retain control over whether they are interacting with this type of liquidity by opting out should they wish to do so.

Speaking to The TRADE, Aquis chief executive officer Alasdair Haynes said a relaxation of the ban with the option to opt in and out would offer liquidity providers more choice and would improve the exchange’s immediacy of execution.

“Liquidity providers are key to the market. Through this they get the choice to decide who they want to trade against. The technology allows members to decide if they want to interact with more aggressive flow. Those who are worried can opt out. It’s harmony amongst market makers,” he said.

“The issue with the current rule is that we are reducing opportunities for companies. Non-client [proprietary trading] has grown to become significant and we have slower time to execution because we don’t have that flow. It might be toxic, but people want that immediacy. Banks themselves have always said that the reason they supply less is that they want immediacy and we didn’t provide that.”

Aquis moved to ban prop trading firms – sometimes referred to as high frequency trading (HFTs) – from accessing its markets in 2015, claiming that their more aggressive type of trading was detrimental to the market and damaging to liquidity.

“Being able to resolve this issue of toxicity has differentiated us. There’s no one else I know that’s been able to action the tech that we have to give people the choice,” added Haynes. “We’re not going back on what it used to be. But in times low institutional volumes all markets suffer and we’re not sitting on our laurels. Reducing toxicity still remains important to us – we don’t think it’ll drastically change that. It gives more people the opportunity to trade.”

Haynes confirmed he expected the move to boost Aquis’ market share in the medium term, but short term it will be a complex implementation process. Liquidity providers will need to code up to the new technology to ensure the right flags are in place to show what is tradable liquidity and what is not to certain firms. The exchange said in a statement that the October implementation date would allow members and data providers to adapt to the change.

Aquis has significantly diversified its business over the last few years, expanding its dark pool, Aquis Matching Pool (AMP), and closing auction, Market at Close (MaC). Most recently the exchange launched dark to lit sweep orders on its dark pool.

“Our business has grown significantly over the last few years across the Matching Pool and MaC. It’s time to reflect on what we originally did in 2015,” said Haynes.

Haynes confirmed that following market research, the business was not expecting a negative response from members to the changes, adding that he was confident a large number of proprietary trading firms would be participating come October.

The post Aquis Exchange relaxes eight-year ban on proprietary trading firms appeared first on The TRADE.

A stream of merger and acquisition announcements has become the norm in recent months, as institutions from all corners of the market turn to deals for consolidation and expansion.

This week, the industry’s eyes turned to trading venues as two new M&A announcements were made.

Trading venues, in particular, have viewed consolidation as a method to expand their offerings, allowing them to become a one-stop-shop for their clients.

On Monday 7 August, Aquis Exchange announced plans to expand its block crossing remit with a minority stake in US-based equities block trading start-up OptimX.

The deal was completed as part of a consortium, including DB1 Ventures, the venture capital arm of Deutche Börse Group.

The terms of the acquisition show that the investment has been split into two tranches, payable in cash. The first tranche will see Aquis subscribe $750,000 out of a total first tranche of $3 million.

The second tranche, which is due to take place in a year’s time, will include a further $750,000 out of a total $3 million.

The deal teed Aquis up for its planned expansion into block trading, with plans to add conditional order types in the fourth quarter.

“This has been something in the making for quite a while. It’s part of Aquis’ developed strategy. We added the dark pool last year, then we added the dark lit order sweep. This is the next step, putting conditionals in, because clients want that capability,” Clelland told The TRADE.

Also announced this week was MarketAxess’ plans to acquire multi-asset algorithmic trading provider, Pragma, for an undisclosed sum at the end of this year, subject to closing conditions.

Pragma is an algorithmic trading and analytical services provider across equities, foreign exchange and fixed income. The firm’s clients include asset managers, hedge funds, broker dealers, banks and exchanges.

According to Pragma, its algorithmic trading platform has handled more than $2 trillion of client algorithmic order flow in various asset classes across 50 venues in 2022.

“Our acquisition of Pragma underscores MarketAxess’ commitment to innovating, integrating, and providing our clients with quantitative, AI-powered technology solutions powered by proprietary data designed to simplify and enhance their workflows,” said Chris Concannon, chief executive officer of MarketAxess.

Aquis Exchange and MarketAxess’ M&A agreements revealed this week follow a string of consolidation efforts seen over the last few months.

Read more: Asset manager consolidation wave continues as two deals announced in 24 hours 

Most recently, New York-based prime broker Clear Street announced plans to expand into the futures market with the acquisition of software developer, React Consulting Services, subject to regulatory approval.

React’s proprietary, cloud-native futures clearing platform, BASIS, will be integrated into Clear Street’s existing platform – which currently encompasses cloud-native clearing, settlement, execution and custody. Following the integration, Clear Street’s offering will finance US equities, options, fixed income, and futures.

The integration is set to be phased, beginning with connecting the platform to futures exchanges early next year.

The ongoing flurry of mergers and acquisitions to drive inorganic growth shows no sign of abating, with more announcements expected to be in the pipeline.

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Around-the-clock (24/7) trading is something we already see in the foreign exchange markets and the growing cryptocurrency landscape. Yet with equities, these markets are constrained by market hours which may be specific to a region and/or exchanges themselves.

Major equity markets including the New York Stock Exchange (NYSE), NASDAQ, the London Stock Exchange (LSE) and Tokyo Stock Exchange (TSE) all tend to have trading periods that range between 6-9 hours daily, with markets closed over the weekends and on major holidays. Some exchanges do offer pre-market and after-hours trading sessions, where limited trading activity occurs outside regular trading hours. These extended trading sessions are, however, less liquid and tend to have different rules and regulations that need to be followed when compared to regular trading hours. 

On the other hand, foreign exchange – the largest financial market in the world – benefits from the fact that trading is not limited to one central location but is instead conducted between participants by phone and electronic communication networks (ECNs) in a wide range of markets globally. Foreign exchange markets are open 24/7 in different parts of the world from 5 pm EST on Sunday until 4 pm EST on Friday. This means that at any moment in time, there is at least one market open, with some overlaps existing between one region’s market closing and the opening of another. This allows traders worldwide to be able to meet the demand for a particular currency at any given time. 

Similarly, cryptocurrencies have gained appeal due to their ability to be traded 24/7, including on weekends and holidays. Unlike traditional financial markets, such as the equities space, cryptocurrencies are not limited by set trading hours and can operate continuously – given that they are decentralised and traded across a range of global exchanges, allowing participants to buy, sell and trade cryptocurrencies at any time. 

Whether equities will mirror the around-the-clock model favoured in the foreign exchange and cryptocurrency markets is yet to be seen, with varying viewpoints on whether demand for it exists and whether or not the shift is even feasible. 

Recent technology initiatives suggest a renewed appetite for around-the-clock trading in equities but given the markets were debating the shortening of trading hours just a few short years ago, it begs the question if this is something the equities market participants want or need.

“Already in EMEA, we have six valid trading days. With Middle East and North Africa (MENA) becoming a larger part of indices and portfolio managers’ thinking, decisions will have to be taken around how best to trade these markets. Each asset manager will need to consider the balance between the cost and benefit,” says Stuart Lawrence, head of UK equity trading at UBS Asset Management.  

If equities markets were to offer 24/7 trading, operational changes would have to occur to allow exchanges to accommodate this shift. As seen with the upcoming shift to T+1 settlements in the US, Mexico and Canada next May, institutions will have to rethink the way their operations are set up to allow a more continuous method of trading globally. 

“The move to T+1 will affect trading desks where FX transactions need to be undertaken,” notes Lawrence. “Non-USD based account asset managers investing in US and Canadian securities need to be able to generate and execute FX trades at the end of the US day – there is no longer time to leave it all to the next day as not all pairs with all custodians can settle T+0.”

The same will be the case if the equities markets were to move to a 24/7 execution model. Staffing of desks would have to be very different to allow for continuous trading, using varying methods including follow-the-sun and positioning various support desks around the globe to allow for shift work. 

For larger institutions, which may already have a global presence, this shift will be a lot more feasible than for smaller ones, given that these firms will already have employees operating across the world. 

“For a follow-the-sun based global organisation, increasing headcount a little bit and adding in new processes, more capabilities and ensuring smooth handovers between time zones is not without risk, but it’s probably a bit easier than it is for a relatively small local bank who trades in their home market and not much else,” says Adrian Ip, managing director, product technology and sales at Aquis Exchange. 

For smaller firms, on the other hand, incorporating continuous trading within equities would likely require either setting up new shops in different locations to allow for around-the-clock trading, or outsourcing trading for certain markets – with both presenting additional costs. 

“As the global economy becomes increasinly flexible on working from home, it might be the case that you have some traders trading from home late at night or early in the morning, or both,” notes JW Verret, associate law professor at George Mason. 

“For exchanges, I think as execution shifts to 24/7, exchanges will have to go global to survive. Trading desks will have to look to globalise as well. The global demand for 24/7 will push domestic institutions to find global partners.”

The role of technology

When looking at a potential shift to 24/7 trading in the equities space, there are several potential barriers that exist which could prevent the move. These predominantly relate to technology, regulation and market structure, alongside the most significant hurdle – whether or not market makers and participants are prepared to make this shift at all. 

Earlier this year, Aquis Technologies – a division of Aquis Exchange – launched what it claims to be the world’s first regulated market-grade 24/7 matching engine for both existing and start-up exchanges, named Aquis Equinox, which never requires shut down or down time. 

The development – which covers a wide range of asset classes including equities, ETFs, fixed income, derivatives, crypto and tokenised assets – allows exchanges running on Aquis Equinox to guarantee continuous operation, without the need for shutdown to facilitate software upgrades, infrastructure changes, capacity increases, reference data management or member onboarding. 

“Up until we launched Equinox, the concept of 24/7 trading of equities, or any other asset class, was always a theoretical discussion with some vague possibilities subject to market participants liquidity capabilities, regulators and technological restrictions. It was never an absolute that we can have a market that runs forever. With Equinox, the technological problem is now no longer the bottleneck in this,” says Ip.

“Equinox enables clients to do everything from sequence number resets to instrument and member onboarding alongside real-time software upgrades without having to stop trading, now we pass the baton to regulators and market participants to solve the remaining hurdles.”

For the buy-side specifically, having an order management system (OMS) or execution management system (EMS) that can be used on a global basis is essential to 24/7 execution in equities – allowing all regions to operate seamlessly and communicate with one another on the same platform in order to reduce risk and avoid duplications, which is particularly important for large organisations with bigger trade flows.

“This uniform approach, one which UBS AM uses, ensures smooth transition between desks as we move through the day,” notes Lawrence. “In addition, you need a global transaction cost analysis product and means of communicating in real time, neither of which are onerous requirements.”

Pros and cons

As with any potential move within the global financial markets, benefits associated with a major market structure shift need to be weighed against the negatives. A shift to 24/7 trading in equities could help remove friction associated with access to markets, mirroring the foreign exchange and cryptocurrencies that can be accessed at any time and from any location. Given different time zones, interested participants may be limited to trading stocks in their local region due to lack of access to other markets. Some people may be interested in trading in other markets but may only catch the tail end of the trading day, if at all. 

“We’ve seen a massive period of globalisation over decades if not centuries,” highlights Ip. “What that has meant is that a lot of people around the world in the last 20-30 years start talking about their stock portfolio, including equities from other countries and other regions around the world than their home market. The more that you can do that and the more that you can get greater participation round the clock, it fuels greater liquidity and gives investors worldwide the opportunity to easily access and trade their desired portfolios regardless of region and time zone.”

Highly liquid markets have predominantly been driven by institutional firms, market makers and high frequency traders (HFTs) in the past, but the retail segment is growing. Retail investors contribute an increasingly chunky piece of liquidity to the markets across the globe, particularly in equities, and 24/7 access to additional markets could see this boosted further. 

“If you have retail investors that are putting orders out there, able to interact with real markets around-the-clock – that gives you greater liquidity, which makes these markets ultimately more stable, better for long term growth and everything else that we know that liquidity drives,” adds Ip. 

The equities markets’ current trading model that offers accessibility during specific trading hours currently limits retail participants, even domestically, who want to participate in the market. Individual investors, who may be occupied during existing trading hours due to realities such as their own jobs, may not be able to carry out trades when markets are open. Not only could 24/7 trading in equities benefit market participants who want to access markets outside of their own region, but also those domestically who cannot access markets during existing trading hours. 

In The TRADE’s recent roundtable, Dirk Donker, head of Euronext retail services, notes that “We are seeing a bigger demand for trading ‘after hours’. [To have more of an overlap with the US] is absolutely an element that we need to consider because a lot of the population of Europe is trading US stocks so in that sense we need to align.”

Introducing 24/7 trading within equities could also promote increased fairness among markets, to both institutional firms and retail traders. Currently, futures markets can be used for US equities after trading hours close, however, it is not as liquid as the equity market itself. 

“The need to switch to futures markets after close is just an artificial friction in the market and I think getting rid of it will be fairer and more efficient, particularly for those institutions and hedge funds that exist across border,” argues Verret. 

The possibility of extending market hours is something participants have expressed concern over in the last few years. 

In 2020, buy- and sell-side traders called on the London Stock Exchange and other European venues to shorten equity market opening hours to 9 am to 4 pm GMT in a bid to improve culture and diversity on trading floors and boost intraday liquidity, in response to several industry consultations.

However, following significant debate, exchanges later rejected these bids, stating that the move would not act as a silver bullet solution for the complex issues around diversity and mental health.

“When considering extensions, there must be conversations around – and recognition of – the health and well-being of traders,” notes Lawrence. “Any changes to our trading days would likely require changes to the coverage model, and potentially increase costs.”

Elsewhere, given the growing portion of volumes now being executed during the close in Europe – now upwards of 30% of daily volumes – and the impact it is having on liquidity in the continuous trading day, extending market hours now could be seen as counterintuitive. Not to mention the previous bid by participants to improve intraday liquidity by shortening the daily trading period.

The SEC’s new market structure proposals

The US Securities and Exchange Commission (SEC) proposed four separate rulemakings in December last year, which represent the most significant attempt to revamp market structure for US equities in recent memory. 

One of the potential ramifications of the proposals – if they were to come to pass – is that they will change the competitive dynamic for exchanges and trade execution, alongside changing the dynamic for cross-border consolidation of exchanges, which could ultimately help facilitate 24/7 trading in equities. 

Given that there were only a couple of dominant players in the US, namely NYSE and Nasdaq, it has previously been difficult to get cross-border merger and acquisition activity between exchanges.  

“It’s a long overdue regulatory shift from the SEC that is going to take market share from NYSE and NASDAQ and distribute it among the other 13 exchanges, and that’s going to change the competitive dynamic – such that cross-border consolidation is going to become easier and we’re going to see more joint ventures, more buyouts, more mergers between different regions and that’s an important part of the 24/7 story,” notes Verret. 

“The regulatory change prompts competitive change, the competitive change prompts global consolidation of exchanges and that is what I think ultimately leads to the 24/7 trading environment.”

Are we on the way to 24/7 trading?

Whether or not equities will eventually mirror the 24/7 trading environments we see within the foreign exchange and cryptocurrency markets is yet to be seen. Technological advances have been made which suggest it could be feasible, however, whether the industry deems the concept fit for purpose in equities is still a debatable prospect.  

“Trading 24 hours a day, seven days a week is extreme and I see no immediate demand or need for it,” argues Lawrence. “However, we will see an increase in coverage requirements and there are some benefits to the change.  Foremost is smooth and continuous trading, meaning an asset manager can work on a global level with minimum hinderance. Utilising regional desks improves local understanding and creates market knowledge specialists who can leverage their expertise rather than relying on one generalist desk for global coverage.”

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