Fidessa Launches Fragmentation Analysis Tools for Australia
Fidessa’s tools are already recognised as the industry standard measure of liquidity fragmentation and the breakdown of dark and lit trading across Europe, the USA, Canada, Japan and Asia. The FFI provides a simple number that measures how fragmented the trading in a particular stock or index has become and this can be used to understand the number of venues a trader should visit to achieve best execution. The Fragulator then provides more detailed analysis of exactly where trading in a particular stock or index took place, including analysis across the spectrum of lit, dark and OTC markets.
Steve Grob, Director of Group Strategy for Fidessa, commented: “The changes to Australia’s market integrity rules will transform the trading landscape and require participants to navigate the marketplace in an entirely different way. The new rules also require firms to achieve best execution, and so both the buy-side and sell-side now need to pay close attention to where trading is taking place. These tools provide the comprehensive and unbiased view that firms need to see what is happening and to meet their new obligations. Experience also shows that the rate and shape of fragmentation is different in each marketplace and so having the right tools in place to understand local conditions against the global backdrop is essential.”
“Analysing the market at the end of the second week of Chi-X Australia being in operation, it is interesting to see that they achieved just over 1% of trading volume in the ASX 200. By comparison, Chi-X Japan took almost six months to achieve that level,” concludes Grob.
To help firms understand the real implications of a multi-market landscape, Fidessa has also recently launched a series of white papers, exploring the effects of liquidity fragmentation on all players in the Australian market and positioning them in a global context. Available at fidessa.com, the first two papers explore the impact of alternative trading venues and the role of smart order routing technology; and the opportunities and challenges for local brokers. Subsequent papers in the series will address the specific issues for retail and institutional investors, high-frequency traders and venues in more detail.