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The scale of regulations facing EU-based proprietary trading firms is laid bare today in the latest Acuiti Proprietary Trading Management Insight Report, which finds that senior executives at EU firms spend more than three times as much time on regulation than their counterparts in the US.
The quarterly report, which was released today and is produced in partnership with Avelacom, is based on a survey of the Acuiti Proprietary Trading Expert Network, a group of senior executives at over 100 global proprietary trading firms and provides insights into the key trends facing the community.
This quarter’s report found that almost half of EU-based proprietary trading firms spend between 26% and 50% of their time on regulations compared to none in the US. In the US, 70% of respondents said that they typically spend 1-10% of their time on regulations with the remainder spending 11-25%.
“We have covered before the increasing regulatory burden on proprietary trading firms in the EU when it came to the proposed implementation of IFD/R,” says Will Mitting, founder of Acuiti. “This quarter’s report highlights the extent of the challenges facing firms.
“One major issue for both firms in the EU and the UK is that new rules coming into force are typically automatically applied to Mifid II registered firms. So while the initial regulation contained within Mifid II was appropriate, the level of increased rules over the past decade is creating significant pressures on firms.”
Also in this quarter’s report, proprietary trading firms typically reported an average year in 2023. However, firms based in the UK experienced the best performance last year.
Another key finding is that 68% of respondents said they planned to trade new exchanges in 2024. Many cited APAC, especially onshore India, as a region for expansion, with Brazil also a popular target for growth.
"Our partnership with Acuiti gives us a research-based understanding of our clients enabling us to anticipate their needs and react to their sentiments before they turn into mainstream trends," said Aleksey Larichev, CEO of Avelacom.
“In 2024, there's strong interest in trading with new exchanges, especially in APAC, onshore India, and Brazil. This perfectly aligns with our portfolio of low-latency connectivity solutions and promises great opportunities for us.”
Other key findings in this quarter’s report:
- Costs rise for prop firms as headcount increases in 2023
- Fees set to rise for props as Basel III rules hit clearing providers while concern grows over concentration risk
- Prop volumes in 0DTE set to grow but few new firms planning on entering the market
- Sentiment soars after strong start to 2024
Download full report here: https://www.acuiti.io/proprietary-trading-management-report-q1-2024
