25 February 2008

finextra: Domestic exchanges squeezed as post-MiFID fragmentation hits - Reuters

Equity trading data collected by Reuters since the introduction of the MiFID in November indicates "considerable fragmentation" of the European equity market, with new entrant MarkitBoat making substantial inroads into the publication of trades once carried by domestic exchanges.

In each of the first three months of MiFID, MarkitBoat has achieved the third highest value of trades reported across all European equities after Euronext and the London Stock Exchange (LSE), says Reuters. In volume terms MarkitBoat, came in second behind the LSE, although the LSE published over twice the volume in shares as MarkitBoat, who in turn was significantly ahead of Euronext and Xetra. MarkitBoat also published the second highest value and volume of shares on a per country of listing basis including the Italian, Spanish, UK and Euronext markets.

The Boat platform was initially developed by a collective of top investment banks as a competitive alternative to domestic stock exchanges for the post-trade publication of market data. The coalitition of nine investment banks sold its interest in the venture to UK market data operator Markit in January. At the time, Markit intimated that trades reported on the platform accounted for approximately 25% of the entire European equity markets.

The statistics demonstrate that trade data has become fragmented, says Reuters, although many players may be unaware of the extent of this, particularly in the domestic markets where the data from the local exchanges remains the focus.

Reuters will now be reporting broadbrush data for equity volumes across Europe on a monthly basis to give a developing picture as to how the market is evolving post-MiFID. Access to the data on an individual stock basis is only available to subscribers to Reuters Transactions Cost Analysis Service (RTCAS). The vendor says the information will allow clients to measure the quality of their trades, ensuring that they remain compliant with the best execution elements of MiFID.

Andrew Allwright, Reuters business manager for exchange traded instruments comments: "European stocks are exhibiting the trends that many predicted before MiFID came into operation. Across Europe the market is fragmenting and many domestic exchanges are losing some of their traditional franchises as traders use alternative venues."

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