Wed, 26/03/2014 - 13:43
Flow Traders is a global independent ETP market-making firm. Founded in 2004 in Amsterdam, Flow Traders today has trading operations in Europe, Asia-Pacific and the US. With a team of over 170 professionals, including 55 traders and 11 sales traders, Flow Traders provides continuous liquidity for ETPs through its membership to more than 75 global stock exchanges and trading venues worldwide.
Over the past 12 months the firm has provided more liquidity to its counterparties in part due to the growing awareness among institutional asset managers of trading OTC directly with the market maker.
“In Europe we now have a team of 6 people dedicated to OTC trading covering the buy-side, private banks and the investment banks who are interested in trading OTC,” confirms Christopher Meyers (pictured), Head UK & Eastern Europe ETF Sales Trading, adding: “The main challenge is that a lot of asset managers still don’t realise that they can interact directly with the market maker in an easy, straightforward, user friendly way. That’s very important to know.”
The key benefit to this is that institutional investors receive prices based on the source of liquidity. There is no broker involved as the middle man, so no added commissions for merely facilitating.
“At Flow Traders, investors have direct contact with specialists via phone, Bloomberg chat, RFQ or email. We don’t charge any brokerage commission because that’s our business, we have the expertise and the infrastructure that allows us to trade everything net,” states Meyers.
To maintain its position in the market, Flow Traders requires access to the right information, as fast as possible, and the ability to respond instantly. The group has built its own state-of-the-art software that allows it to calculate, quote and react in real-time to any price movement on any global exchange.
Currently, Flow Traders is onboarding roughly half a dozen new counterparties each month. Last year, between 60 and 70 buy-side counterparties joined the stable to trade OTC, bringing the total number of institutional asset managers to over 300.
“The key to doing business with institutional asset managers is providing fast, good prices to investors in a friendly and professional manner,” says Meyers.
The ability to provide liquidity exactly when institutions need to block trade and keep bid:ask spreads tights is vital, especially as the way investors are executing their trades is evolving. Everything is getting more automated with Request for Quote (RFQ) hubs, allowing investors to review different market makers quoting prices and choosing the best one, whilst complying with best execution policies.
“That’s very important in the current environment and we see it growing. More asset managers are using RFQ systems and it demonstrates an evolution of the trade execution process.
As Europe’s ETP market continues to grow, and with it the depth of liquidity, Flow Traders is focused on supporting investors on how and when to trade ETPs.
“We are a market maker focused on ETPs but most importantly our role is talking to asset managers, explaining to them what it is we do, how they can use ETFs in their portfolio allocation and how they can trade them – understanding the ins and outs,” says Meyers who comments on winning this year’s award by concluding: “We are working hard to achieve counterparty satisfaction by keeping the fees low and the spreads as tight as the market permits them to be. This is how we get our satisfaction and receiving this award is the cherry on the cake.”
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