Do you remember the optimism of the Santa Claus rally? Only a few months ago we were being entertained by stories of the S&P 500 in the high fives by year end (that would be a 30%+ rally from here) and post pandemic recoveries across the board. Then along comes the spectre of war, sanctions, and a cost of living crunch for households.
Santa may need to consider moving with the times as we navigate the growing wave of social responsibility. On the one hand, reindeer power is about as green as you can get to power a vehicle, and on the other…..all that wrapping paper and packaging! Someone needs to tell him ESG does not stand for Extra Special Gift. One of the recent benefits of the growth of ESG campaigns in financial markets is that the spotlight has moved beyond a focus on the social DNA of companies to invest in. Questions are now being asked about how all the companies who are active in financial markets are behaving. Could there be ways to introduce new practises and infrastructure in order to become more sustainable as an organisation, and as a community?
Santa may need to consider moving with the times as we navigate the growing wave of social responsibility. On the one hand, reindeer power is about as green as you can get to power a vehicle, and on the other…..all that wrapping paper and packaging! Someone needs to tell him ESG does not stand for Extra Special Gift.
To some people Christmas feels the same year after year, maybe because the favourite armchair in the corner of the room is comfortable, Grandpa’s view never changes too much and he probably likes it that way – he’s seen enough change over the years. For kids, however, each year brings fresh festive excitement; as they grow older their perspective changes and they remain curious.
We should be careful with three letter acronyms (TLAs) especially at this time of year when ELFs should not be confused with ELPs. Along with the bank SIs, ELPs deliver a service not dissimilar to Santa’s little helpers – mysterious, fast moving, hard to spot with the naked eye. Undoubtedly hard working and always available, they often deliver nice surprises of various sizes. Over the last three years, our data scientists have helped us to develop a much better understanding of what is happening in SI land and each year we unwrap a little more.
In the good old days, your Christmas tipple might have been a gin & tonic, of which there were few mainstream choices for the spirit or the mixer. Then, almost overnight, there was a somewhat confusing abundance of choice for both, garnished with the decision of what variety of fruit or vegetable should be sliced into it.
Yesterday we commented on closing auction volumes, which are, of course, composed of multiple trades in a stock at the same time and price – perhaps familiar to those of you who like to combine several presents together in one piece of wrapping paper. When it comes to a single large present it is always nicer when it comes as a surprise. Away from the auctions, most institutional traders target dark pools as an efficient way to shift large positions. With no guarantee of trading, most of these dark trading venues bring the advantage of mid-point pricing. Benefits include saving half the spread as well as reducing the information leaked when interacting with a public order book.
Inevitably at this time of year our thoughts turn to the important matter of choosing the right dessert to round off a hearty Christmas lunch. To get us in the mood, for our first 12 Days of Trading 2021 post, we decided to look at the Closing Auctions, the “afters” of the trading day if you like. We discovered that the top four largest ever auctions all occurred in 2021.
Is the fun about to come to an end for those trying to optimise (and capitalise on) their interaction with one of the most heavily traded equities in Europe? It has to be one of our favourite stocks for the complexity it presents for equity exposure to a single organisation. Two different lines of stock, both traded heavily on two primary exchanges. Competition aplenty from the UK and European MTFs and the full spectrum of market mechanisms accessible to trade; lit, dark, auctions, off-book (on-exchange), OTC….the list goes on. It presents a challenge for many investors, banks and brokers and a long standing opportunity for the canny arbitrageur.
Do some traders have an advantage over others… and does it matter? How fast are equity markets? Or how much of the market operates at high speed? big xyt took an electron microscope to our normalised market data to find out. We analysed UK lit markets to measure the time between a trade and the last relevant orderbook change. The FCA established 500μs as a speed benchmark in their latency races paper. This is 200x faster than the 1/10 of a second after the gun in which a sprinter can false start.
