News review : Equities

PLATO PARTNERSHIP GAINS MOMENTUM.

Four asset management firms – AXA Investment Managers, Union Investment, J.P. Morgan Asset Management and Fidelity Worldwide Investment – have joined the ranks of the Plato Partnership, a block trading platform which is set to launch early next year. It aims to increase transparency, simplify market structure and lower trading costs in Europe for trading of stock and other equity-like assets, such as exchange traded funds.

Members already on board include fund managers Deutsche Asset & Wealth Management and Norges Bank Investment Management as well as seven banks – UBS, Barclays, Citi, Deutsche Bank, Goldman Sachs, J.P. Morgan and Morgan Stanley. Unlike other platforms recently launched such as Luminex in the US, Plato is not-for-profit with buy and sellside firms each having a 50% say on decisions, regardless of how many of each class of firm there are.

In addition, part of the revenues generated will go towards funding research through its Market Structure Innovation Centre. It will not only be used to identify better ways of executing trades but also looking at ways to reduce the cost and improve quality of the broad range of processes and data required to support the execution lifecycle.

Many studies have been conducted into the effects on markets of controversial trends such as high frequency trading or dark pools and these are often used to bolster arguments on both sides of the debate. However, market participants and academics alike admit findings have been incomplete owing to a lack of extensive and high-quality data available for study.

Paul Squires, head of trading at AXA Investment Managers commented, “Having the opportunity to get involved with Plato Partnership at such an early stage is very exciting for us. The prospect of guiding the sell side towards the launch of a not-for-profit project such as this is unique – I don’t believe that the buy and sell side have ever worked together in this way before, and we are proud to be a part of that.”

Christoph Hock, head of trading at Union Investment added: “Plato’s vision of a Market Structure Innovation Centre that sponsors academic research working alongside a trading utility to deliver on the resultant insight is thrilling for us and ultimately beneficial for our clients. We believe that supporting such a positive initiative is part of the stewardship obligation that we hold on behalf of our clients.”

Meanwhile, Kristian West, global head of equity trading at J.P. Morgan Asset Management noted, “Plato Partnership has a compelling proposition and I am looking forward to helping them refine the market model. Their intention is to offer lower frictional costs for our funds, which would support our core objective of best execution and improved returns for our clients.”