Ralph Achkar, of MarketPrizm makes some very good points in an article from Futures & Options World, that the death of Single Dealer Platforms has been greatly exaggerated.
His comments echo many of the posts here regarding the value of single dealer platforms in a cleared world.
Ralph comments that,.. Going forward, more of the traded instruments will be available on electronic platforms, and a large section will be required for clearing.
By enabling trading across asset classes using web-based interfaces, sell-side firms that use SDPs provide their clients with a more comprehensive view into the market, a better opportunity to maximise profitability and the assurance of best execution. In recent months, we have seen more and more banks building an infrastructure to service a wider set of client needs.
This will create the need for SDPs to invest in an expanded infrastructure for trading additional asset classes, which historically were not part of their wider scope. At the same time, the clearing requirements will make some aspects of the post-trade an integral part of an SDP service. In addition, aspects such as collateral management will become an important factor to consider in the overall costs of the trading, decision-making process.
Back in May I wrote that…
We have long-held the position that under Dodd Frank, the SEF execution mandate (whilst not welcomed by all), will nonetheless create opportunities for Single Dealer Platforms to provide enhanced value to clients through SEF Aggregation, and smart order routing capabilities, as certain products move from a bi-lateral to a cleared model.
And indeed, our recent white paper on Single-Dealer Platforms in a Cleared World discusses these very points..
Far from signaling the end of single-dealer platforms, the impending raft of new regulation in the US and Europe will create a new business environment in which the direct online channel is more important than ever for both banks and their clients.
Indeed, we have mentioned MarketPrism’s views on SDPs before
Filed under: Paul Blank, Regulation, SEF, Single-Dealer Platforms |
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