24 Mar 2016

Investors and brokers unite to make algo-trading more transparent

The Investment Association and the Association for Financial Markets in Europe (AFME) have today paved the way for safer and better executed Algorithmic trading on Europe’s financial markets.

Algorithmic trading is a key component of an investor’s ability to get the best price and execution for their clients. Therefore, it is vital that there is fair and accurate sharing of information between both sides about how any given algorithm operates - most notably between the investors and their broker/dealers.

The industry has come together to proactively create this open framework, ahead of MiFID II, which supports Buy and Sell side in meeting their regulatory obligations.

To ensure that there is a consistent methodology of how information is shared between each side of an electronic equity transaction, the Associations have created standardised questionnaires that outline the level of detail investors and broker/dealers will provide each other ahead of an electronic transaction taking place.

The framework includes technical standards that a platform should meet in order to automate and facilitate the consistent sharing of information.

The Associations are now calling on data vendors and suppliers to put forward their proposals to set up platforms that meet these Criteria. The Associations will not endorse or restrict their members to use any particular vendors’ platform.

The framework for the Platform can be viewed here.