There has been a lot of coverage of the

href="http://www.finextra.com/news/announcement.aspx?pressreleaseid=31202"

target="_blank">LSE's first half results this week.

Most of the comment seems to focus on the erosion of its market

share by the MTFs and whether the pricing of the MTFs is

sustainable in the long term. Whilst there is little doubt that

these are both valid areas for discussion, I wonder whether there

are some more subtle issues involved.

Firstly,

it's not just about pricing per se

but about pricing models. The MTFs have adopted maker/taker

models that reward those traders posting liquidity on their

platforms whilst charging those who remove it. This favours the

Electronic Liquidity Providers at the expense of the large banks

and brokers which generally prefer a wholesale discount pricing

structure. The LSE has switched between both pricing models and,

to date, neither approach seems to have stopped its market share

from declining. Ironically, though, this is where the LSE (and

other primaries) may have an advantage. This is because they can

use the various MTFs they have built (or acquired) to separately

meet the needs of these different market segments. In this way,

they can create a range of sub-brands that can experiment

simultaneously with different pricing/delivery models (how about

trading FTSE 100 stocks in Euros, for example?). And, just like

the high street supermarkets, shoppers benefit from the economies

of scale regardless of whether they buy premium, regular or

budget priced products.

Another point that

maybe needs more emphasis concerns exactly who the enemy is.

Maybe the real challenge for the LSE is less about protecting its

UK market share from "troublesome MTFs" and more about

establishing the LSE Group as a genuine European/global

supermarket for stock and other financial instrument trading.

Deutsche Börse's creation of its international market (XIM)

demonstrates where its own thinking is heading in this regard

and, of course, NYSE Euronext has always made a big play about

its pan-global, multi-asset credentials. The LSE, however, has a

number of situational advantages in this battle, too - not least

of which is the fact that London is generally seen as the

financial trading capital of Europe. In addition, it has its

acquisition of Borsa Italiana and its Canadian and Japanese

connections to play on.

The MTFs face a

similar dilemma. Is the enemy the primary exchanges or should

they be vying instead to establish themselves as best alternative

trading venue for Europe? Breathing down their necks are the ELPs

and other market makers who have realised that, in the post-MiFID

world, maybe they don't need venues at all and can instead

interact with order flow directly.

As the

folks in Brussels start writing the script for MiFID 2

"where we went wrong and what we intend to do about

it", it looks like there is some doubt over what the

right shaped entity for pan-European equities trading really is.

Maybe the answer lies in the old axiom - keep your friends close

and your enemies closer still.