European Execution Venues: The Good, the Bad, and the Ugly
Report Summary
European Execution Venues: The Good, the Bad, and the Ugly
While MiFID succeeded in creating new trading venues in Europe, a lack of liquidity has led to the demise of many.
London, 18 August, 2010 – A new report from Aite Group examines European market structure in the wake of MiFID, and discusses how various European equity markets and equity trading venues have fared since the implementation of MiFID. The report also muses on MiFID’s success in promoting competition among trading venues with the creation of MTFs (the good), its failure in unifying all European markets (the bad), and Europe’s persisting lack of liquidity, especially compared to that of the United States (the ugly).
MiFID was introduced to create a pan-European marketplace that would allow Europe to compete with the U.S. market and provide accessible and efficient trading to the European Union. One of its primary goals has certainly been achieved — MiFID created competition at the execution level. Many of the venues created have not survived, however, due largely to a lack of sustained liquidity in Europe’s equity markets.
“Many execution venues were created in 2007, when European equity volumes had reached their peak and the business model for MTFs looked sure to succeed,” says Simmy Grewal, analyst with Aite Group and author of this report. “As liquidity dwindled, some of these venues found they could not survive — let alone show a profit — and were acquired by larger exchanges or ceased to operate. If liquidity does not return to pre-2008 levels, we can expect to see further consolidation in the MTF space.”
Among the exchange venues referenced in this report are Bolsa de Madrid, Deutsche Börse, the London Stock Exchange, NYSE Euronext, and SIX Swiss Exchange. MTFs including BATS Europe, Chi-X, NASDAQ OMX Europe, NYSE Arca Europe, and Turquoise are examined in depth.
This 27-page Impact Note contains 34 figures. Clients of Aite Group's Institutional Securities & Investments service can download the report.