European institutions are importing another U.S. trend.
More of their equity trading is expected to go electronic over the next few years. This means European institutions will do more of the trading themselves, at the expense of the sales trader.
In three years, institutions across Europe expect to execute a little more than half of their equity trading volume through high-touch channels, according to firms polled for a recent Greenwich Associates study on European equity investors. This figure represents a fall from the approximately two-thirds of institutional trading volume executed high-touch there this year.
Regulations, such as the Markets in Financial Instruments Directive, are a big reason for the jump in electronic trading, according to John Colon, a managing director with Greenwich Associates. “MiFID is often cited as one of the reasons that you’d see electronic trading taking off,” Colon said, “because now you’ve got some of the barriers being removed and the regulatory and structural environment in Europe becoming much more conducive to electronic trading.”
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