This summer, FIA EPTA marked the 5th anniversary of its foundation. Although still a comparatively young organisation, this milestone has caused the people, like myself, who were there at the start to reflect upon how things have changed since we’ve been in business – as well as looking forward to what the next five years might bring.
Back in 2011 there was no single voice towards regulators in the fast evolving world of electronic trading. Significant regulatory change was being embarked upon, so 22 firms joined forces to form an organisation that would ensure their industry would be represented. FIA EPTA was founded, under the auspices of the global Futures Industry association (FIA), to be a spokesperson for the industry, providing a consolidated view and point of contact to policymakers and explaining the many complexities of the electronic trading market.
Over the past five years, FIA EPTA has contributed to improving regulation that creates better functioning markets. With its market experience FIA EPTA has given advice to regulators on implementing proper risk controls, centrally cleared markets and how to create more transparent markets. These are measures have been able to help regulators shape a market that is safer, more efficient and more cost effective for market participants and end users alike.
The perception of the industry has also developed significantly in the five years that FIA EPTA has been operating. The added value that principal trading provides the markets has been reinforced by numerous reports published by regulators including the AFM, FCA, Bank of England and ESMA. All of these reports support the message that FIA EPTA has been saying for the past five years: principal trading provides a critical source of liquidity on which the markets and end users rely.
Looking back, we’ve achieved a lot in a short space of time. Our collective contribution to MIFID, for example, and the strong working relationship forged with our parent association, FIA, in what is now a very international world of regulation. It is important that the industry strive to achieve more global harmonisation. This could not be achieved without vigorous dialogue with our members in working groups, who contribute thoughts and ideas on the changes needed to improve the industry and support a more transparent and efficient market.
So what will the next five years have in store for the industry? Our primary focus will be to continue to provide liquidity in the market. The industry’s biggest challenge is to ensure that this liquidity remains, because some recent regulatory initiatives might actually have the opposite effect. We must make sure that capital requirement rules under discussion are proportional and appropriate for our members, who have very different business models to the banks these regulations were initially developed for.
Now with 29 members, FIA EPTA continues to grow from strength to strength. The next five years will see our members continue to concentrate on innovation and, if needed, adapt business models to remain competitive, which is the best way to provide healthy and efficient markets. We have much variety in the styles of trading represented within the group, from high end HFT to point and click trading. But we are all an important part of an efficient, liquid market. FIA EPTA will continue to provide one voice for our members for the next five years and beyond, to do what we can to ensure this situation remains.