The global ecosystem for trading is hugely diverse and a competitive hub for innovation. The landscape includes equity and derivatives exchanges spanning hundreds of years of history, electronic trading platforms, niche players and start-ups, and novel models for trade routing and price discovery.
The sector is internationally focussed by design. Building a successful trading venue requires capturing a significant amount of liquidity. As such, trading venues need to be open for business to participants from around the globe, resulting in a need for compliance with many different regulators. A global outlook also means competition across borders, as trading venues in emerging markets look to establish a local, and increasingly regional, presence of their own.
The industry is constantly evolving, and flow of new ideas has continued to grow in the past decade. In recent years, much of the focus has been on the rise of cryptocurrency exchanges, and their increasing intersection with the real economy and traditional financial services regulation. There have also been significant amounts of innovative products and venues emerging, in property, emerging market bonds, securities financing, niche commodities markets and even airline tickets.
Changing regulatory requirements
For venues that are internationally active, it is necessary to navigate a complex web of local regulatory regimes to provide access to users from Hong Kong, Australia, Japan and others. As such, operating a trading venue has never been more complex from a regulatory compliance perspective.
In Europe, the regulatory requirements for exchanges and trading platforms have become significantly more complex with the implementation of MiFID II. Measures such as transaction reporting, transparency and position limits have increased the compliance burden for established venues, and now represent a material barrier to entry for new venues.
Meanwhile, in the US reforms to the regime for Swap Execution Facilities remain a work in progress, and in Singapore the regime for Capital Markets is being overhauled, expanding the number of firms who will be caught as Organised Markets.
How Bovill Newgate helps exchanges and trading venues
Bovill Newgate work with a wide range of trading venues, from long-established exchanges and trading platforms, to start-ups and innovative new concepts, to manage their compliance burden.
- Authorisation – we have local expertise to assist new trading platforms, from concept to licensing, in the UK, EU, US, Singapore and Hong Kong.
- Global footprint – we assist established trading venues to grow their global presence, by helping them to navigate the complex rules on providing services to third country participants.
- Compliance support – we partner with trading venues to meet their local compliance obligations, through ongoing compliance advisory, implementation support, focussed compliance reviews, and short-term resourcing.
- Market abuse – trading venues are at the front line of the fight against market abuse. We help them to develop market abuse risk assessments, establish effective controls, and calibrate and implement surveillance solutions.
- Global standards – we work closely with exchanges in emerging markets, to help them align their practices to international standards, and prepare to work with third country participants.
