The positive interaction of retail and institutional order flow

welcome to trader tv your insight into trading for the professional investor i'm hamish macarthur in paris at wbr's trade tech i'm here with wale azizi from equiduct well welcome to the show thank you how much thanks for having me why is retail order flower attracting so much attention from institutional traders retail flow is important from a flow characteristics perspective it's a flow that is non-toxic that's point-and-click that's investment making by definition which makes it the highest quality possible flow that you can find on the financial market that flow has been around three percent of pan-european equity volume and since covert we've seen increased participation of retail into the financial markets so this has increased due to the fact that people are now more interested in financial markets because of lockdowns and because of the opportunity also they can get in the market the second element is the easier and cheaper access you can basically today invest in a stock while waiting in line for a baguette which you couldn't do before the third element is all the publicity around the meme stocks and gamestop that has brought more retail investment to the market making it the driving force for price changes in 2020 for instance do you have any evidence to back that up as the lead in pan-european for retail flow we've basically seen this firsthand bear in mind that we actually cater for five million retail investors that are accessing equiduct through 52 credited workers if we look back to march 2022 this month was labeled the big sell-off because everybody was selling their stuff you'd be surprised how much to know that basically the retail were not selling they were buying so we've noticed net buying position in retail for march of more than 405 million euros on equity which types of traders are engaging with you there's primarily two types retail brokers on one side which are the brokers that basically channel the retail flow from the app from the websites and whatever that is into the exchange equitax is free of charge for those brokers the second category is institutional and the market makers that are there to provide liquidity for the retail flow and we charge those half a basis point it's a match made in heaven those two categories do not share the same strategies timeline and do not show the same risk appetite what's your view on payment for order flow we've published a paper saying that we actually are in support of asthma in banning payment from the flow payment first law is detrimental to the end investor and we do not provide it but we offer the next best thing which is free trade how are firms assessing execution quality on aqueduct we offer them a best execution report that takes them trade by trade and line by line and compares it to the rest of the market on top of that we've contracted with big xyt which is an independent tca provider to be able to look more in detail elements like spread the touch spread in depth ebp or presence time etc in order to assess the market quality as a whole we've been looking for instance at the spread that touched since covet and because we're in france today let's compare apex our execution service to that of uranus paris which is best of book and do an expired century limitless you clearly see the once in a lifetime black swan event that was covered where you see the three platforms performing as best as they can under those circumstances and immediately after april 2020 you see those spreads reversing and market gradually coming back to normal throughout 2021 you see similar spreads between the three exchange services and then october 2021 we've seen a tipping point and apex started performing better than the two other platforms up until today free of charge of course what should firms do in order to engage today onboard into aqueduct entails going through a simulation process where you give us one more port of your data and then we take it through a simulated environment that yields two main elements the first is what you would have achieved as a firm in terms of exclusive quality should you have been members of aqueduct at that time the second element of the analysis is the cost savings that you would have achieved using aqueduct versus the primary market or the secondary exchange that you've been using once the simulation is done onboarding is pretty simplified it's a membership to burst berlin which is the rectory umbrella under which we operate and getting in touch with our fantastic on board the team that'll get you through the line within the next three months i'd like to thank whale as easy for taking the time to be on the show and of course you for watching i'm hamish mcarthur this has been trader tv at wbr's trade tech in paris