What are the biggest constraints or challenges you see in the future trading landscape?

With more than 250 bil $ under management and a global multi-asset trading desk with volume in excess of 1 trillion bil Euro yearly, it is easy to understand that liquidity is our main concern.

We have to deal with a huge variety of orders across a wide range of asset classes, each with a diversified set of requirements and criteria in terms of how best to achieve best execution. 

In order to succeed with such a large trading operation, we have to use a mix of orders, from brokers’ algos to low touch and DMAs, from dark pools to traditional high-touch orders. When liquidity is low and market impact might be significant, our approach is to source liquidity from all available sources.

In defining our execution strategy, liquidity is certainly the key element we consider. Our objective is always to build our positions trying to minimise market impact. Due to our large sizes we want to do that with the appropriate level of confidentiality to protect our investors. Therefore, the route and venues that we select depend really from the type of order that we are trying to execute. If we are working a large position, we feel our investors are better protected when trading away from lit venues, using high-touch orders with our most trusted counterparties, because our trading info are better protected as no one can see what you are trying to do and you can eventually get a decent part of your institutional block trade done. We know that if a large trade is spotted entering the market, our traders are open to abuse by HFT firms. It’s like playing poker where the other players else can see your hand. We have nothing against HFT, we just do not want to interact with them. These firms are making it fundamentally more difficult for institutional long-term investors to interact with the market and find liquidity at fair prices and generates volumes not liquidity.

If we are executing high ADV stocks, then we normally look at low-touch, electronic platform, DMA and algos, because we believe it can give us a better access to a fragmented liquidity and ensure the required level of anonymity.