Transcript Slide 1

MiFID & EU Markets
what is next
ECMI – London Stock
Exchange
Brian Scott-Quinn – ICMA Centre
[email protected]
1st February 2010
© ICMA Centre
www.icmacentre.ac.uk
The New Business Models
success depends on meeting a new market nee
• London has never had a concentration rule
• London had LSE competitor – Tradepoint
1993
• Failed – did not address a new market need
• Chi-x came onto scene at time of change
– Cheap new systems
– Demand from algorithmic traders
– Less capital being committed by traditional market
markers?
• Dark pools a response to new market need
– Institutions finding average market size on LSE
falling
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Background to MiFID
• THREE OBJECTIVES + LISBON 2000 SUMMIT AIM
• Establishing a single market in wholesale financial
services
• Making retail markets open and secure
• Strengthening the rules on prudential supervision
• “EU to become the most competitive and dynamic knowledgebased economy in the world capable of sustainable economic
growth with more and better jobs and greater social cohesion”
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Some MiFID issues
• Can we distinguish between Investment Firms and
Regulated Markets (RM)/ Mulilateral Trading
Facilities (MTFs)
• Both operate crossing networks/ dark pools but under
different regulatory frameworks
• Should they be the same? Can we distinguish
– a broker/dealer: providing a discretionary service
– An RM/MTF simply providing a platform
• Do we need to re-examine the MiFID pre-trade
transparency waiver?
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The new world
• High frequency trading
• Electronic market making
• Hedge fund algorithmic trading
• Dark pools
• Lack of dealer capital due to banking crisis
• Need for ‘a vibrant capital market to help EU achieve
its Lisbon goal? Does MiFID have a role here?
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Macro issues
• Is MiFID only relevant to trading large company
stocks
• Would bond market pre-trade transparency help
• Will the new Paris Euro bond market and the new
LSE retail sterling bond market help
• Will MiFID help smaller companies raise finance
when banks won’t lend
• With up to 60% of trades now algorithmic, does this
help the economy – does it give liquidity to others
• WHAT COMPANY WANTS SHAREHOLDERS FOR
THE BLINK OF AN ALORITHM
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