Quick thoughts on AFME Conference

Unsurprisingly, regulatory impact, market readiness and new business models tended to dominate last week’s AFME conference.

With many participants in ‘build phase’, re-engineering businesses to support regional introduction of regulatory reforms, variously covering pre-trade transparency, execution mandates, post trade reporting and clearing.

However, there were concerns raised that regulators might not be able to fully assess the ‘liquidity impact’ that the sheer number and pace the regulatory reforms will have on the ‘micro-structure’ of price and liquidity formation  – bearing in mind the inverse relationship between liquidity and transparency.

All agreed that end clients costs would rise, in many cases quite considerably.

Yet there will also be many opportunities for innovation, especially those able to ‘scale up’ their infrastructure (such as prime services providers) to provide innovative solutions to clients.

As mandated products shift from a bilateral risk pricing model to a service based agency offering, Single Dealer Platforms will adapt delivering aggregation and routing of SEF liquidity, risk management around reporting, clearing, margining and collateral transformation and RWA capital optimisation solutions.

A number of these themes were covered in our Single Dealer Platforms in a cleared world white paper.

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