Looking at the FFI today, I was intrigued to see that

fragmentation in Paris and Amsterdam went down last week (by

nearly 10%) compared to a small increase in London and a

relatively unchanged week in Frankfurt.

Looking at the data more closely, the difference seems

to be that Chi-X and BATS did less volume in Paris and Amsterdam

than they have in previous weeks. This is even more surprising as

overall volume at both these MTFs has increased over the week.

This may be just a blip but it did get me thinking about how the

overall shape of the European landscape may end up. One scenario

is that, whilst the primary exchanges increasingly look to

provide a pan European service (

href="http://deutsche-boerse.com/dbag/dispatch/en/notescontent/gdb_navigation/press/INTEGRATE/mr_pressreleases?notesDoc=C307D882F1BB0787C125759A0040A776&newstitle=deutscheboersetolaunchxetraint&location=press"

target="_blank">Deutsche Börse to Launch "Xetra

International Market" in Q4), we may see that

MTFs become more and more niche focussed. A good example of this

is Burgundy which is "only" going to trade Nordic stocks but, in

this way, is able to generate real momentum in its home

market.

So, at one end of the spectrum, we may

see a few Pan-European supermarkets that offer a complete range

of asset classes that can be accessed by both lit and dark order

types. These will find themselves competing with a number of

smaller, local stores each offering specialist services either in

terms of their stock coverage or in the trading styles they

support. Of course, the MTFs would argue that they are actually

cheaper than the supermarkets with which they compete but, as in

real life, it is the total cost of visiting (connecting) and the

convenience of the complete experience (clearing and settlement)

that dictates where shoppers spend their money. Also, as can be

seen from US equities markets, the current status quo is no

guarantee as to which firms end up as the supermarkets and which

as the local stores.

Finally, it was great to

meet so many people at TradeTech in Paris last week. Thanks for

all the positive comments about the site and what we are

doing.