Interview

‘We are much more hands-on these days’

Jan Mark van Mill (APG) on the developments in securities trading on trading platforms

Interview

‘We are much more hands-on these days’

Jan Mark van Mill (APG) on the developments in securities trading on trading platforms

Securities trading on trading platforms has markedly changed in recent decades. The same is true for European regulations aimed at increasing competition between platforms and transparency for investors. How does APG, one of the world’s largest pension investors, view these developments? We put six questions to Jan Mark van Mill, head of Treasury & Trading at APG Asset Management.

How do you view all the developments in securities trading on trading platforms?

‘I started as a trader on our equities desk 20 years ago. There have been huge changes since that time. Especially in the development of technology and our role as an institutional investor. In the old days, you called a stockbroker and gave him a transaction order. Afterwards you would check to see if the price was correct. You didn’t have all the information or resources to do that yourself. Now, thanks to trading algorithms, we have information from all exchanges and trading platforms within reach. We are much more hands-on these days.’

Greater competition between trading platforms should lead to lower costs and better price formation. Do you agree?

‘Price and costs are of course important, but not our only concern. We also look at liquidity on a platform, so the volumes traded and the parties involved. This is extremely important for an institutional investor trading large volumes. Of course we have seen explicit transaction costs come down, but also that exchanges are increasingly making money through the sale of market data. They have a monopoly in this area, while this information is important for investors.’

Are you seeing greater transparency on trading platforms?

‘Transparency on the trading platforms has definitely improved. But it is sometimes difficult to make sense of all the available information. A consolidated tape, such as they have in the United States, could be the answer to this problem.’

Europe is planning to centralise securities trading on the trading platforms. What is your view?

‘Around 55% of transactions in the equity markets are on exchanges or trading platforms, but for us this percentage is much higher. In the bond markets, we see that despite the arrival of new platforms in recent years, there is still a lot of segmentation and fragmentation into product groups. Bonds after all vary in tradability. Standardisation of products would help in this respect.’

And what do you think about the rules that will come as a result?

‘The rules should improve transparency and investor protection. At the same time, this will mean more regulatory pressure. You can see this in the current debate in the European Parliament on the usefulness and need for reporting on some of the rules. There is also uncertainty as to how we should interpret some of the requirements. For instance, there is the principle of best execution, which says that we execute our orders on the best possible conditions. But there is no uniform definition of this principle. So when actually are we regulatory compliant – when are we doing the right thing? This is still a live topic of discussion.’

The regulations are currently being revised by European policymakers. What do you see as important?

‘As a large institutional investor, we also trade extensively with other institutional parties. We do this on trading platforms, but not on the traditional exchanges. We need to ensure that this does not become too limited, as this will affect the implicit transaction costs of our investments. Our orders, and those of other market participants, are very large. This has a direct effect on the price formation of equities. We want to avoid this. Having said that, if the new rules limit the way we trade, we will have to look at alternatives. Ultimately it’s about getting the best result for our clients.’

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