The adoption of uniform tick sizes by trading venues across Europe would help multilateral trading facilities to compete more effectively, according to BATS Europe, a pan-European multilateral trading facility. The firm argues that uniform tick sizes, along with clearing interoperability and common stock symbology, will ease smart order routers’ search for the best price and liquidity.
“The three frictional structural costs for a smart order router (SOR) are tick sizes, symbology and clearing,” Paul O’Donnell, COO, BATS Europe, told theTRADEnews.com. “An SOR needs to identify the different symbols for each venue, which tick band and the smarter routers try to figure out the impact of clearing costs on overall execution. Standards in these three areas will mean SORs will route depending on who has the best price and most liquidity.”
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