Interview with Natan Tiefenbrun TradeTech Europe 2011 conference


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TradeTech Europe 2011 is the largest and most senior meeting place for the electronic trading community. It gathers over 2,000 buy side traders, brokers, trading venues, regulators, industry experts, economists and fund managers. It is created by the industry advisory board and is highly valued by all participants. TradeTech is designed to give you true value and help you grow in your job, ensuring top results and great performance for every member of your team.

The work on the conference agenda is full steam ahead. We are interviewing hundreds of your colleagues and peers from buy side institutions across the globe to find out exactly what they would like to take away from the conference agenda and the exhibition floor.

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Interview with Natan Tiefenbrun TradeTech Europe 2011 conference

  1. 1. Interview with Natan Tiefenbrun, Commercial Director, Baikal London Stock Exchange1. What do you see as the biggest challenges in your industry for the next 12-18 months?Uncertainty around regulatory change is certainly a challenge, although there is potential for bothpositive and negative outcomes. We would welcome changes that facilitate competition in the arguablymonopolistic environment of index derivatives trading and clearing. And of course we would like to seechanges that allow exchanges and MTFs to compete on a level playing field with OTC alternatives tofacilitate trading of large or sensitive orders without requiring inappropriate pre-trade transparency thatis a source of market impact.2. Whats your view on high-frequency trading? Do they add any value to the market?The growth of high-frequency trading, enabled by a decline in trading and clearing costs, is a measureof MiFID’s success in introducing competition. There is a gap between the academic studies suggestingthat HFT provides liquidity, tightens spreads and dampens volatility, thereby reducing transaction costs,and the perception of politicians who question the “social value” of speculation. I don’t think we’ll getany impartial answers whilst politicians blame financial markets rather than their own profligacy for therecent government credit crisis. Hopefully the recently announced study of HFT by the UK Treasury willprovide a better understanding of their true impact/contribution.3. With orders becoming smaller and order flow dropping, does the market really need allof the trading venues and the liquidity they provide?It is the customers, not the venues, that provide liquidity. Given the lower volumes and thus lowerrevenues, I’m sure customers would prefer not to bear the costs of so many discrete venues (alongwith their respective CCPs and CSDs). So we expect further consolidation, although regulatoryintervention might be required to prevent certain exchanges from exploiting natural monopoly theyenjoy through ownership of their CCPs and/or CSDs.4. If you had a magic wand and could change one thing in the way markets operate now,what would you do?I’d eliminate the substantial barriers to competition in equity derivative trading. Exchange groups areusing intellectual property assets and the ownership of their derivative CCPs to erect barriers tocompetition. The introduction of competition for trading and clearing listed derivatives, combined witha move towards centralised trading and/or clearing of OTC derivatives will make markets moreefficient, more transparent, and more resilient to shocks.Natan Tiefenbrun will be speaking at TradeTech Europe 2011 on 12 - 14 April, 2011.Visit for details.