Currently, less than 3% of all European trading volume is going to Multilateral Trading Facilities (MTFs). However, Aite Group expects to see a rapid pick-up of MTF adoption in the European market, which could account for more than 20% of European trade volume by the end of 2011.
A new report from Aite Group, LLC examines the existing exchange environment and its competitive landscape in the post-MiFID European market. It also analyzes the potential adoption rate for alternative execution venues in their upcoming battle against the incumbent exchanges.
The report, titled "Post-MiFID European Market: Can Reality Catch Up to the Hype?", predicts that with the expected further proliferation of the European execution venues, competition for the European market share will only intensify as MiFID rolls out. The European market will have to fully accept the fact that electronic trading has become the main channel for trade execution, as the United States has already realized with Regulation NMS. Automation of the entire trade life cycle will become even more important as firms struggle to comply with MiFID compliance reporting. The de facto, monopolistic nature of some of the exchanges will certainly be threatened in the post-MiFID reality, as Multilateral Trading Facilities and dark pools continue to multiply and spread throughout Europe, touting anonymity, speed, low market impact and low execution fees.
"Despite predictions that exchanges will suffer most as a result of MiFID, the reality is that the exchanges still hold the key to their ultimate fate in a post-MiFID world," says Sang Lee, managing partner at Aite Group and author of this report. "In fact, under MiFID, exchanges should feel compelled to penetrate other financial markets to boost overall market share and revenue and seek opportunities in other instruments, including highly profitable OTC products."
This 16-page Impact Note contains 5 Figures and 2 Tables and profiles the following alternative venues: BOAT, Chi-X Europe Ltd., Equiduct, Euro Millennium, ITG Europe, Liquidnet Europe, and Turquoise. Clients of Aite Group’s Retail and Institutional Securities & Investments service can download the report by clicking on the icon to the right.