Retail Investment 'Driven' by Prop Trading

The UK retail investment sector is "fraught with complexity and heavily driven by proprietary trading," and "mom and pop" investors are suffering the consequences, said Damian Bunce, European head of electronic sales trading at Barclays Capital (BarCap), who spoke at Waters Technology’s Best Execution event held in London on Wednesday.

Bunce said that while some things about the Markets in Financial Instruments Directive (MiFID) have not pleased alternative trading venues, retail investors have been worse off since the introduction of the EU directive, which, ironically, was conceived to protect them.

"A lot of the inefficiencies in MiFID that the multilateral trading facilities (MTFs) complain about—large-in-scale being one of them—are ultimately in place to protect the retail investor," Bunce said. "The regulators are worried about mom and pop logging onto stockbroking websites to buy 20 shares, for instance. The irony is that if there is a marketplace right now that is fraught with complexity and heavily driven by prop, it is the UK retail sector."

"We all grapple at an institutional level with executing on behalf of a pension fund, for example, but the little guy at the other end of the spectrum is the one who is actually worse off right now," Bunce said.