Kepler Cheuvreux was the winner of this year’s best electronic equities trading award at the European Market’s Choice Awards. Bobbie Port, KCx’s Head of Electronic Distribution, tells Global Trading what has led to the firm’s success.
What has driven your success this year?
This year, we have achieved revenue growth, improved market share, and increased client mandates across all our execution businesses.
Following the launch of our new global execution strategy, we set about improving our engagements with our clients. Through constant client consultations and partnerships, we focus on delivering products designed to respond to the evolving needs of our clients. Our clear priority is to remain focused on our mission statement “to build solutions which clients love”.
Our KCx API Analytical Suite enables clients to access the same forecasts and analytics that we use for our own quantitative intelligence, which powers our trading engine.
Our new liquidity-seeking algorithm, Pulse, launched in Q3/23. It targets arrival price and strategically prioritises non-displayed venues to source liquidity. The adoption rate has been very impressive, with over 500 clients now using the algorithm.
By leveraging our Flow Aggregation design, we have successfully implemented aggregation of multiple orders to support consolidation of algorithmic flows for the same security, improving execution quality, reducing market impact, reducing costs, and boosting overall trading efficiency.
Our DynVWAP model utilises our new proprietary volume forecasting and uses real-time data to continuously predict volume distribution throughout the trading day. The model enables us to manage unexpected events, such as sudden spikes in volatility or liquidity, more effectively.
How have you focused investment to support this growth?
As our electronic trading business grows our priority is to deliver innovative products for our clients. To support this growth, we have focused our investments into diverse talent, new expertise and technology advancements.
In the past two years, we have made deliberate efforts to recruit talent from a variety of sectors, including stock exchanges, technology and asset management firms. This approach has brought fresh perspectives and innovative solutions.
As our electronic trading footprint has been growing, we have introduced two newly formed teams; Algo Trading and Market Structure. The Algo Trader role bridges the gaps between trading, sales trading, and quants, breaking down traditional barriers across teams. The market structure role oversees macro and micro level content and provides key regulatory insights to assist clients in navigating the complexities of the equities trading ecosystem.
Continuous investment into our custom framework allows us to maintain a resilient and agile platform that can sustain the increasing growth of our algorithmic usage. This framework offers high flexibility, allowing users to tailor trading algorithms by designing their own specifications with our team to meet their unique needs and preferences to fine-tune the approach with precision.
We expanded our global fix specification with over 70 new algorithmic parameters, allowing for greater customization and precision in executing client strategies. This formed the foundation for new product rollout such as PAIRs Algo Trading, Scaling Close, CBOE Super Sweep, Swiss AVD and TAL.
What has been customer response?
Our clients value our transparent, proactive and collaborative approach. We have successfully established a strong foundation of customer loyalty, with clients consistently supporting and partnering with us as we introduce new products. The market clearly appreciates disruption and continuous change driven by agility.
We are pleased to see significant progress in the US, both in acquiring US-based clients and trading in to the US market. Through 2023 and 2024, 15% of our new client acquisitions came from the US, making it our second most successful region after the UK, which accounted for over 30% of new clients. The US is now our second-highest region in terms of executed volumes.
According to an industry survey, we rank in the top 10 for European Cash Equities (Execution and Research). Our low-touch product gained share in all client regions, with double-digit gains across the US and Europe. More interestingly, our recent investments and client engagements have further strengthened our high-touch offering, with double to triple-digit share increases.
In which areas are you building the team (numbers/skills etc), and why?
We are strengthening all KCx teams, having welcomed over twenty new members since early 2022. Ten new members sit within Electronic Distribution and the Quant space, reflecting our commitment to expanding our algo product offering.
The US region is a core part of our strategy and one of our fastest growing offices, now housing a team of trading specialists. We are investing significantly in both personnel and product development, reinforcing our commitment to expanding our presence and capabilities in that region. In the last year, we have fostered new relationships with market leading technology firms, venue operators, and execution partners to enhance our access to unique liquidity.
Our clients will notice an increased focus on market structure. There is a growing interest from our European clients to understand US microstructure and how this compares to Europe, such as guidance around the US SIP versus the potential EU consolidated tape, and the ATS ecosystem versus the MTFs and Periodic auctions, that exist in Europe. Lastly, our US clients have shown interest in the Microwave technology developed in Europe, a technology that has been highly effective in the US.
How will the market see your offering evolve over the next twelve months?
The market should expect more innovation, products and advancements in our technology over the next 12 months.
Our partnership with Adaptive will bring multiple benefits to our client base. This a very ambitious project aims to deliver a proprietary, scalable sequencer-based architecture known as KCx Omni enabling us to continue innovating at a rapid pace. The new architecture will greatly enhance our electronic trading capabilities.
An extra layer of integration will include our API powered TCA platform KCx Vector, delivering advanced analytics and customized TCA for order performance monitoring, live TCA, pre- and post-trade analytics.
In 2022, we selected BMLL as a partner. By leveraging BMLL’s order book analytics and advanced insights we better understand market microstructure and optimise our trading strategies. Clients will notice improved routing capabilities in the US and EU.
Client demand in Portfolio trading has increased over the last 12 months. To enhance our offering, we invested in a new PT system that has already been deployed across our execution desks. This upgrade not only strengthens our existing services but also empowers our expansion into new markets, including APAC, and MENA (via our European entity).
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