There are questions being asked whether equities trading is any more transparent, which was the original intention of regulators. But there is another factor that is likely to prompt big changes — Brexit. The case to watch is Switzerland, which does not have dark pool caps and accounts for just over 7 per cent of all European share trading by notional value, according to Cboe Europe data. It is included in the calculations because it has struck an equivalence deal with the EU. The UK may reach a similar deal on share trading equivalence with Brussels. Switzerland’s market share has largely been unaffected by the arrival of Mifid II. There have been some glitches since Mifid II began in January but UK-based EU trading venues effectively ignored the rules to compete with the Swiss. Moreover, regulators unofficially turned a blind eye as they sought to recast the rules. While regulators keep working, EU venues may ultimately find it difficult to compete against London’s gravitational pull as it already trades just over half of the European market.
But the UK may not seek an equivalence here. The Financial Conduct Authority is more comfortable with dark pools, and the Mifid rules have a disproportionate effect on London markets.
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