Spent a busy few days travelling round the Nordics last

week. The trip culminated in my participation in a debate hosted

by John Lauritsen at the Copenhagen offices of Carnegie that

pitched the mighty OMX exchange against Chi-X which has been

stubbornly building its Nordic market share over the past few

months. Given that up to 20% of some Nordic stocks are now

regularly traded on the Chi-X platform instead of OMX the stakes

were pretty high. Representing OMX was the imposing figure of

Bjørn Sibbern, its Copenhagen CEO, who was pitted against

Chi-X's CEO, Mark Howarth. As the debate raged (respectfully)

back and forth I was half expecting the mighty Olof Neiglick of

Burgundy to leap into the ring as tag team partner for Mark. But,

in the end, the debate finished as a well fought draw.

One interesting point that was made concerned the whole

issue of market supervision and the obligation that the primaries

have to maintain an orderly market and to supervise the trading

activities of their members. Mark made a solid defence of his

market surveillance system claiming that it was on a par with, or

better than, the LSE's but the fact remains that the obligation

to maintain orderly trading rests with the primaries not the

MTFs. Bjørn pointed out that it was in this area that he

and other national exchanges had to incur higher costs whilst the

MTFs could "piggy back" on his market. He summed up his position

with a good point - if, for some reason, he decided to close OMX

Copenhagen tomorrow then no one would trade Danish stocks at all

whilst this is not the case for Chi-X (or any other

MTF).

Seems like this is a point that the

primary exchanges should be making much more noise about since,

ultimately, they could refuse to come out to play at all. Instead

of trying to beat the MTFs at their own game - price - maybe the

primaries should be accentuating their differences.

As the regulatory mandarins scratch their heads over

MiFID 2, I wonder also whether the regulators should create a

single European body that all listed firms are obliged to report

to and that undertakes market surveillance on a Europe-wide

basis. This would effectively level the playing field and remove

another distinction between the primaries and the MTF

world.

One thing that did emerge, though, is

that fragmentation in the Nordic region is on the rise and

participating firms will need to have a clear view of their

strategy for operating in the new environment. This is both a

challenge and an opportunity as trading firms that don't have to

go through the same learning curve as their European counterparts

will be at a distinct advantage. John made this point, too,

highlighting the difficulties in knowing exactly where this

liquidity is going to. He cited the US where over 50% of

liquidity that was traded on NYSE is now traded on dark pools,

systematic internalisers and other non-lit venues. Obviously

then, accurate information is going to be at a premium as the

European picture continues to develop.

Anyway,

thanks to John and his team for a well organised event and a

great meal afterwards.