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CEO CHAT: Liquidnet’s Merrin Sees Virtual High Touch as the Future

Traders Magazine Online News, April 10, 2018

John D'Antona Jr.

Seth Merrin has seen the future…and it is high-touch. Virtual high-touch that is.

Liquidnet, the global institutional trading network, has just released the launch of Best Ex Replay, the newest addition to the Liquidnet Virtual High Touch suite powered by data and analytics from OTAS Technologies. It is here, in the Virtual High Touch suite, where Chief Executive Seth Merrin sees the future of the firm and trading.

So, what is Virtual High Touch exactly?

To hear Merrin tell it, as he sat down with Traders Magazine Editor John D’Antona Jr, is to hear more about a philosophy rather than an individual product or products. Merrin wants to continue to empower buy-side traders by getting into their hands the latest and most advanced technology that frees them up to do what they do best – trade. Time spent doing compliance reports and other back office tasks only makes the trader more inefficient and that is not good. Traders are meant to trade, he said.

“What we've been working on actually for the last, three or four years that came to fruition in the last year and a half, is a whole new class of trading technology. We call it Virtual High Touch and it stems from a bunch of things going on in the marketplace,” Merrin began. “Historically,  high-touch traders have advised their customers on how to best utilize their products and source liquidity, but this role has since been marginalized. In fact, all over the world our members have told us that, in many cases, they don't even know who their coverage is at this point. This is unfortunate. We believe that the context a high touch trader provides is a very valuable service that has been provided to our customers, not by us necessarily, but by the larger banks that have the resources and capabilities to do it.”

Merrin continued to explain that Liquidnet’s solution, Virtual HighTouch, gives both portfolio managers and traders more intelligence about how their orders are being handled and executed. With the reduction of high-touch sales traders around Wall Street when compared to a decade ago, the notion of calling up coverage and finding liquidity via telephony has been greatly reduced despite the need for it now.

“Like everything else that we do at Liquidnet, we’ve leveraged technology to create a much better outcome, a much better solution, we believe,” Merrin said. “We've identified the things that are really absolutely necessary and critical for a trader, and there are a couple of things.”

First, he said, is that traders, especially under MiFID II and all the regulations that are going on around the world, have told Liquidnet that they spend 50% of their time searching for liquidity. But the other 50% of that time is wasted on administrative and compliance-related work.

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