17 November 2006

finextra: Deutsche Börse touts MiFID services

Following news earlier this week that a consortium of investment banks is setting up a trading platform that will compete with domestic European exchanges post-MiFID, Germany's Deutsche Börse has unveiled a package of services that it will implement following the introduction of the EU directive next year.

The German exchange says it plans to introduce a number of MiFID-related services following the introduction of regulation, including a bilateral trading service via its Xetra Best platform.

The system will allow so-called 'best executors' to execute their own client orders, or orders from other trading participants, against their own books. The exchange says it will be enhancing the Xetra Best from Q2 2007 in a bid to drive more users to the system.

The Börse will be introducing new reporting services to help clients comply with the pre and post-trade reporting and transparency requirements of the directive.

Holger Wohlenberg, MD, market data and analytics, Deutsche Börse, says: 'Our services, which are bundled in the MiFID toolbox, not only allow our clients to ensure transparency, but also provide data histories and statistics, a transaction reporting service and support with counterparty cleansing.'

Earlier this week a group of seven global investment banks agreed to establish a pan-European equities trading platform that would compete with the regions exchanges.

The seven banks account for around half of all European equities trading and news of the platform drove down the share prices of all the big European market operators, including Euronext and Deutsche Börse.

But Euronext chief executive Jean-Francois Theodore came out fighting and told reporters that the Paris-based exchange will be able to take on the competition and remain the main market for French shares.

Theodore said Euronext remained opposed to the directive allowing banks to set up alternative share trading platforms as it will lead to a fragmentation of markets.

However the pan-European exchange is reported to be working on developing a new system that will enable banks and brokers to trade stocks outside of its central dealing platform following MiFID. It is thought the transaction platform will allow banks and brokers to internalise trades which will enable them to fill a customer's buy or sell order in-house rather than sending it out to the exchange.

Earlier this year electronic broker Instinet said it was launching an automated trading system for European equities called Chi-X and vowed undercut the clearing and settlement fees currently charged by the major European clearing houses and custodians.

Meanwhile former director of IT strategy at Dresdner Kleinwort Wasserstein Bob Fuller is spearheading a new pan-european trading platform that will offer a MiFID-compliant, integrated Europe-wide single connection for trading services and execution.

© finextra