Registered: Aug 2006
04-06-12 07:09 PM
I found that has happened in US stocks as well. That whole space is dead. How long can this carry on? capital access is being impeded, everyone is trading C or BAC. wtf is going on
European buyside investors are growing increasingly frustrated at their inability to trade in small and medium-sized stocks, as commercial pressures deter high-speed marketmakers from providing liquidity in the stocks.
Speaking at a Paris trading conference run by Knight Capital last month, Mark Northwood, global head of equity trading at Fidelity Investment Managers, said: “Investors like us have most difficulty in trading small and mid-cap stocks.
There is a lot of scrutiny on high-frequency trading and its effect on blue-chip trading, but the issues are most acute further down the market.”
Northwood’s comments follow a report, published by accountancy firm Grant Thornton in December, which found that one of the primary concerns of the 50 fund managers surveyed was dwindling levels of liquidity in small and mid-cap stocks.
High-frequency traders focus almost exclusively on large, blue-chip stocks, where profits are easier.
“The move to high-speed trading has had unintended consequences for small and mid-cap companies as it strips the economics from the secondary market,” said Philip Secrett, head of Aim and smaller listed [companies] at Grant Thornton.
“We have markets that were designed to be allocators of capital but they have moved from platforms that are designed for investing to platforms that are designed for trading.”