The sellside is concerned about false positives as they affect marketmaking

The sellside is concerned about false positives as

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of the biggest issues raised by MiFID II. The sell‑side is concerned about false positives as they affect market‑making capabilities, and the buy‑side is concerned as they can impact perceived portfolio liquidity. Therefore, any tool that can accurately identify false positives will be highly valued. Regulatory tech services – Any technology‑based service or consultancy firm that can assist with keeping market participants (buy‑side, sell‑side and platforms) on the right side of compliance and best execution will do well in the years ahead. The successful providers will identify for firms the necessary data to meet regulatory obligations while managing downstream IT implications of regulations. Internaliser engines – Firms that operate multiple trading desks, across different time zones or subsidiaries will require an advanced technology system that provides the ability to internalise order flow automatically. This will enable them to execute trades in‑house and thus save brokerage fees. Information networks (INs) – Sourcing and  aggregating liquidity. IN firms provide an aggregation layer, providing the trader with two key sets of functionality: a global view of liquidity and a choice of trading protocols and execution mechanisms from which to select. The trader uses this layer to obtain an accurate, timely view of available liquidity across markets. INs use a high degree of technology embedded in buy‑side and sell‑side’s internal systems, e.g. Algomi, B2Scan. Consortium‑owned networks between buy‑side and sell‑side – Collaborative efforts between the buy‑side and sell‑side, where market participants
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Financial stability in the digital era Banque de France • Financial Stability Review • No. 20 • April 2016 117 Future evolution of electronic trading in European bond markets Elizabeth Callaghan are coming together to attempt to create liquidity in the bond markets. The hope is to enable greater transparency of trading interests across the marketplace between buyers and sellers of bonds. The relationship is made up of banks and asset managers, e.g. Neptune. These collaborative‑based firms use open standard technology, allowing participating sell‑sides to send pre‑trade indications to their clients (asset managers) across the network. Consortium networks provide flexibility of connectivity options. The buy‑side can receive pre‑trade indications from multiple banks in a standard format using a single connection (i.e. FIX protocol). 1|2 Innovative incumbents Price‑maker hedge funds – Hedge funds are not new entrants but they will adapt to the new landscape. While traditional buy‑sides will most likely not step in as “price makers” on central limit order books (CLOBs) or other agency‑only trading venues, hedge funds may step in (providing it suits their trading strategies) and provide larger illiquid pricing, bolstering liquidity. This is because hedge funds do not have the same legal structure and mandates as asset managers.
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  • The American, Financial services, Neuromancer, Banque de France, FINANCIAL STABILITY, FINANCIAL STABILITY REVIEW

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