An interview with Nicolas Bertrand

In this interview for the High Frequency Trading Review, Mike O’Hara talks to Nicolas Bertrand, Head of Equity and Derivatives Markets at the London Stock Exchange Group.

HFTR: Nic, welcome to the HFT Review. Maybe we can start with you introducing yourself and explaining what your role is at the London Stock Exchange?

NB: I’m the Head of the Equity & Derivatives Markets business of the London Stock Exchange Group, which covers three trading venues: Borsa Italiana; the London Stock Exchange; and Turquoise. I’m responsible for the secondary markets of those trading venues, covering a wide array of products, client relationships and business development in equities, both cash and derivatives.

I’m a long-standing employee of the London Stock Exchange Group, having been here for ten years. Previously I was at Borsa Italiana, where I was Head of Derivatives Markets and prior to that I worked on different assignments in investment banks, the last one being Citibank in London.

HFTR: I imagine you’ve seen some significant changes over that time?

NB: Yes, bearing in mind that when I joined Borsa Italiana in ’99 the Italian stock market had just been privatized (in 1998), so it was going through some significant changes.

I’ve worked a lot on the internationalization of the Italian Exchange, on the development of new products, especially derivatives, where we have transformed the markets. It took some time but we increased international trading volumes to about 50% of the market and significantly developed the product base, adding new markets like the electricity market, introducing new market microstructure, developing the single stock options and single stock futures.

In the exchange industry, you are generally doing things for the long term, because with market structure changes it takes some time to see the results of what you’re doing. And when you are talking about developing a network of clients, you’ve got to get them one by one; you definitely can’t do that overnight.

HFTR: The London Stock Exchange launched its new sponsored access service six months ago. Can you tell me a little bit about the business drivers behind that and how things have been going with the service since it was rolled out?

NB: A lot of people believe that it was launched purely to attract high frequency traders. But actually that wasn’t really the driver. We wanted to work on the diversity of our client base, to be able to adapt the type of access to the activity of the client. That’s really what we’re trying to achieve, providing real time access to a wider range of investors, contributing to more liquid and more diversified order books, and bringing about that diversity while at the same time limiting the risks.

HFTR: And are you starting to see more diversity now as a result?

NB: Yes. It’s not 100% linked to the launch of the service but it’s a sure trend. And the trend is not just that end clients require more direct access to the markets, it’s also that with the current challenging economic framework, in this environment of very high volatility customers need to be faster. Prices are moving quickly and there is much greater attention on risk management, both from a price, credit and a counterparty risk point of view. And because of this changing face of the market you are seeing some clients who in the past maybe wouldn’t have considered using direct order book access, who are now doing so. The type of access they were getting in the past was no longer responding to the needs that they now have. 

HFTR: If we look at the proliferation of trading venues in Europe, what impact do you think the growth of high frequency trading has had on the way liquidity is shifting around those venues?

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