Steve Grob likens high frequency trading to being spoon fed a meal in a restaurant. The kitchen has to cook each spoonful of food before it can be served but “insists on getting paid before he gives you more food,” says the director of group strategy at Fidessa.
“Love it, hate it, HFT is here to stay,” says Grob. “It was created in part by multi-market strategies so if anyone is to blame it’s the regulators themselves.”
Grob is equally prescient about so-called dark pool trading.
“Whatever marketer dreamt up that name should be shot,” he says. “It drips with maliciousness.”
He says a computer that matches orders is much like an exchange. It is no wonder many jurisdictions want dark pools regulated.
“The key is post trade transparency,” says Grob. “Operators of dark pools, with the exception of Liquidnet, have order sizes similar to lit pools. Why does trading in those situations need to be dark?”
Efficient execution is increasingly becoming a competitive advantage for asset managers, he says.
With investors trading across multiple markets, navigating across dark and lit pools makes achieving efficiencies in order flows increasingly difficult.
“Fidessa has real time transparency on how an order is progressing and can prove in real time if it is the best order available,” says Grob. “That enables investors to understand where costs are.”
Last year the ASX offered a Fidessa product that enables them to view liquidity across all order books and to trade across all platforms.
Fidessa now has 15 people working for it in Sydney. It wants to hire more.
“We had a footprint. Now we have a long-term project,” says Grob.