Are tomatoes fruit or vegetable? Is a Jaffa Cake a cake or a biscuit? In 1991, the latter question was finally settled through a court-case; after considering eight different attributes of the snack, it was agreed that Jaffa Cakes are legally cakes, not biscuits. Unfortunately, not all debates end with such a definitive resolution.

In this paper we explore how the role of Electronic Liquidity Providers (ELPs) has changed over time and how the lines between ‘lit’ and ‘dark’, ‘toxic’ and ‘non-toxic’ liquidity are not as clear as they seem.

We show that by carefully managing our interaction with liquidity sources at all levels we can provide high-quality, low-impact liquidity from sources previously perceived as toxic.

There is no doubt that technology is taking over our lives. We allow machine learning algorithms to select the news that we read, to recommend the TV that we watch, to drive cars, and (unwittingly) to decide the outcome of elections. As coined by Klaus Schwab in 2015, we are in the midst of the ‘Fourth Industrial Revolution’ and the pervasion of technology is only going to increase.

Liquidity is a good thing. Increasing the available liquidity in a stock makes it easier and cheaper to trade. Regulators are using this as a basis to push stocks more and more towards trading on traditional transparent exchanges…

Last year, Redburn introduced the world to the concept of the ‘Order Entry Requirement’, or OER. The idea is that for orders below a particular size it is not worth interacting with certain venues. Although this seems intuitive – there’s no point sending a small order to a block venue – quantifying the value is far more difficult.