It was interesting to read Jeremy Grant's piece in

today's FT about the outage at NYSE Euronext yesterday. Somewhat

counter-intuitively volume didn't move to the MTFs but, according

to Jeremy, traders simply "munched on their croissants" whilst

the techs fixed the problem. This outage highlighted again the

difference between the US and Europe where US volumes are much

more evenly spread between venues. What this means is that

traders are far less dependent upon the concept of a "primary"

exchange for a reference price. Some argue that this is the fault

of the smart order routing (SOR) technology as it is unable to

kick off its decision-making logic without first receiving a

reference price from a primary exchange. Others say that the lack

of a US style consolidated tape is the culprit. Both of these

points are true but the real problem is that market sentiment

still seems to favour doing nothing if the primary market is

down. In a similar fashion, most SOR technology will favour the

primary venue over MTFs when that market is in its auction phase

as this is the behaviour that market participants

want. So, it would seem that the challenge for MTFs is

not to get technology vendors to make their SOR kit work

differently, but to get the wider trading community to be more

accepting of using their platforms when the primary market is

down. As fragmentation continues to rise across Europe the whole

idea of a primary market will increasingly be called into

question and it will be interesting to see when and where the

tipping point for this really is.

Anyway back

to croissants, looking forward to TradeTech Paris this week.

Please come by the Fidessa stand (no. 46) for a chat if any of

you are going to be there too.