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A-Team Insight Blogs

Talking Intelligent Trading with Andrew Delaney: Plato Gets Its Socrates

Kevin Covington’s appointment to the board of Delta Capita this week underscores a perhaps more wide-ranging development: the emergence of the Plato Partnership, which named Delta Capita as its strategic consultant earlier this year.

As you’re doubtless aware, Plato Partnership is an industry-led consortium that aims – in its own words – to offer “new ways of thinking about markets” with the aim of “building a fairer market together.” If that worthy goal rings any bells, you might be forgiven for thinking of Markit. [Or indeed the SPReD consortium for reference data, whose existence was outed by the newswires just yesterday.]

Covington will be a useful addition to Delta Capita – which itself was formed in 2010 to offer new thinking about consulting services as an alternative to the Big Four – as it gets its teeth into the Plato gig. We knew Covington from his time at BT Global Services (via Radianz), but most recently he’s spent four years as CEO of trading technology infrastructure monitoring specialist ITRS, where he was credited with turning around a flagging brand into a viable, private equity-backed entity.

In the announcement of his new role, Covington mentions Plato specifically, lending credence to the idea that he’ll be closely involved, albeit as a non-exec at Delta Capita. He said: “Delta Capita is experiencing an exciting period of growth, underlined by a number of key industry engagements including appointment as consulting partner to the Plato Partnership. My core role will be to build on Delta Capita’s achievements in bringing innovative IP-led technology solutions to market to solve real client problems.”

And Plato Partnership is a client with a lot of industry problems that it wants to solve. Focusing on equity markets, the consortium will start with the creation of a trading utility for anonymous block trades, in what appears to be a response to the impending introduction of more stringent internalization rules under MiFID II. The group has already settled on the London Stock Exchange’s Turquoise as trading platform provider for the initiative.

According to Plato Partnership, the trading utility will be a one-stop shop for anonymous block trades and will be open to all market participants with the aim of: Reducing trading costs; simplifying the market structure; creating deep liquidity opportunities; and delivering an equal trading experience for all market participants.

This initiative and future ones – the Partnership is actively soliciting ideas for how to improve industry processes – will be informed by a so-called Market Structure Innovation Centre (MSIC), which will “produce independent research and analytics, open to peer review, and aimed at seeking out ways in which participants can collectively build a better financial ecosystem for all, as well as helping to inform and support the regulators’ market structure debate.”

It certainly has the clout to effect change, counting as members a pretty powerful mix of buy- and sell-side institutions. Here’s the list of its members: Axa Investment Managers, Deutsche Asset & Wealth Management, Fidelity Worldwide Investment, Franklin Templeton, J.P. Morgan Asset Management, Norges Bank Investment Management, Union Investment, Barclays, Bank of America Merrill Lynch, Citi, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley, and UBS.

Covington – and his new colleagues at Delta Capita – will have plenty to chew on as the Plato team scours the marketplace for areas for improvement. As we all know, there are many.

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