This month’s article comes to us from Alison Crosthwait at Instinet. This research report represents a lighter form of communiqué; in a letter to our Australian counterparts. We, as buy side traders and investment managers, are currently dealing with many of the issues presented in this report. This also serves as a timely follow up to our Fall Conference roundtable discussions. Click here to download a copy of  From Canada With Love

Executive Summary:

Dear Australian Buy side Trader,

Things you need to do:

1. Dig deep on smart order routing (SOR). Traders have to know the behavior of the router they are using and ensure it does what they need it to do.
2. Compare and contrast liquidity aggregators. They vary widely in terms of which venues they access and what strategies they use.
3. Trading in a multiple market place environment requires superior trading tools. Investigate commission sharing arrangements to help obtain quality trade executions while at the same time managing your commission dollars.
4. Confirm your data.

Things you need to know:

1. Market share calculations are not the same.
2. Both basic connectivity and algorithmic adoption took longer than expected.
3. While high frequency trading can have a significant impact on market structure, Australia is already familiar with it and thus the impact of competition on spreads and volumes should be muted.
4. Volume may not necessarily port over to another exchange in case of an outage.