Evercore shuts London trading desk weeks after start of Mifid II

(Financial News) -- Independent investment bank Evercore Partners has closed its European equities execution desk just two weeks after the implementation of sweeping new trading rules that are widely expected to put pressure on smaller firms.

Daryl Bowden left his position as Evercore's London-based head of trading earlier this month, according to people familiar with the matter.  Bowden is a well-known figure in the City, having helped co-found the equities business at interdealer broker Icap (now TP Icap). He has also held senior sales trading roles at both Bank of America Merrill Lynch and Macquarie.

Jim Dixon, an equity sales trader at Evercore, who joined in 2016 from Societe Generale, has also departed, the people said.

Evercore is maintaining its sales team covering UK and European clients in London.

News of the departures comes two weeks to the day since the European Union’s revised Markets in Financial Instruments Directive came into force. Mifid II forces asset managers to choose the brokers that execute their orders based on factors including speed and price — a key tenet of the rulebook known as 'best execution'.

‘As you see the buyside being squeezed, you'll see the sellside being squeezed’

A recent survey of fund managers by the research firm Tabb Group found that 88% expected large investment banks with big equities divisions to gain market share from smaller rivals as a result of Mifid II. These banks' superior technology, infrastructure and access to capital gave them the edge, respondents said.

Tim Cave, an analyst at Tabb Group, said: "There is already a concentration of activity into the top tier brokers, at the expense of smaller firms. Mifid II's focus on best execution and unbundling means only the best execution providers will survive."

Rebecca Healey, head of market structure and strategy in Europe, the Middle East and Africa at block trading venue Liquidnet, said: "Brokers are having to redefine their value proposition to the buyside. As you see the buyside being squeezed, you'll see the sellside being squeezed."

She added: "I don't think it's just about being 'big' enough to withstand Mifid. It's about whether you can define your value proposition to clients."

Last October, Financial News reported that Virtu Financial had decided to shut the Swedish broker Neonet, which it acquired as part of its $1.4bn takeover of rival electronic trading firm KCG Holdings. The following month, Goldman Sachs signed a deal to execute trades for clients of Bloomberg’s agency broker Tradebook .

Mifid II will further require fund managers to split out the cost of investment research from the dealing commissions they pay their brokers. This has also led to suggestions that smaller providers on research could suffer as their institutional clients become more discerning about what they are willing to pay for.

Evercore will not stop providing research to clients in Europe, the people said. According to its website, it produces investment research across a range of sectors including consumer, energy, financials, autos, healthcare and industrials.

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