This week the

href="http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=10570900"

target="_blank">LSE released its quarterly results

which showed a modest increase in Q1 revenue and so it seemed

like a good opportunity to dig a little deeper into its share of

equities trading and see whether it really has turned the corner

in the face of the competitive threat it has faced from the

alternative MTF community.

The chart below

shows the

href="http://fragmentation.fidessa.com/stats/exchange/LSE.html"

target="_blank">LSE's market share of the

href="http://fragmentation.fidessa.com/stats/index/UKX.html"

target="_blank">FTSE 100 in the first 6 months of

this year (to be fair, I have also included the lit and dark

volume from

href="http://www.tradeturquoise.com"

target="_blank">Turquoise which it acquired at the

end of last year). Also included in the graph are the total title="FTSE 100"

href="http://fragmentation.fidessa.com/stats/index/UKX.html"

target="_blank">FTSE 100 shares traded by both

volume and value over the same period. As you can see the title="LSE"

href="http://fragmentation.fidessa.com/stats/exchange/LSE.html"

target="_blank">LSE's market share of its benchmark

index seems to be flattening out and possibly even coming back a

little bit.

href="http://fragmentation.fidessa.com/wp-content/uploads/FTSE-100-chart-1.png"> class="alignnone size-full wp-image-1267" title="FTSE 100 chart

1"

src="http://fragmentation.fidessa.com/wp-content/uploads/FTSE-100-chart-1.png"

alt="" width="419" height="325" />

This is in stark contrast to the same period last year

when its market share plummeted by nearly 20 percentage

points.

href="http://fragmentation.fidessa.com/wp-content/uploads/FTSE-100-chart-2.png"> class="alignnone size-full wp-image-1268" title="FTSE 100 chart

2"

src="http://fragmentation.fidessa.com/wp-content/uploads/FTSE-100-chart-2.png"

alt="" width="423" height="327" />

So, should we expect the bells to be ringing in

Paternoster Square as the

href="http://www.londonstockexchange.com"

target="_blank">LSE celebrates having fought off the

competition from those pesky MTFs? Well, yes and no. Obviously

it's good news that its market share of the title="FTSE 100"

href="http://fragmentation.fidessa.com/stats/index/UKX.html"

target="_blank">FTSE 100 is getting stickier but

over half the entrants in

href="http://fragmentation.fidessa.com/stats/"

target="_blank">Europe's top twenty most fragmented

stocks are actually now

href="http://fragmentation.fidessa.com/stats/index/MCX.html"

target="_blank">FTSE 250 companies. This shows just

how ubiquitous the whole fragmentation process has now become.

And, just like other primary market centres, the title="LSE" href="http://www.londonstockexchange.com"

target="_blank">LSE is also under pressure over

market data fees and the possibility that

href="http://www.cesr-eu.org/" target="_blank">CESR

may impose a Mandated Consolidated Tape (MCT). If this follows

the US model, then all venues will contribute to the cost, and

share in the subsequent revenues, equally. This is good news if

you're a newcomer to the party but not so good if you've always

enjoyed the lion's share of the market data revenue

cake.

The other dimension to all this is what

happens in Europe as a whole. This point was well made by

Alasdair Haynes in the

href="http://www.fidessa.com/downloads/publishedarticles/pa/MIS-email.asp"

target="_blank">Missoni Tapes which you can download

href="http://www.fidessa.com/downloads/publishedarticles/pa/MIS-email.asp"

target="_blank">here. Alasdair makes the very valid

point that the pan-European picture is becoming increasingly

important as the next front in the battle for liquidity. A quick

look at Switzerland's

href="http://fragmentation.fidessa.com/stats/index/SMI.html"

target="_blank">SMI index or Stockholm's title="OMX S30"

href="http://fragmentation.fidessa.com/stats/index/OMXS30.ST.html"

target="_blank">OMX S30 index only goes to reinforce

this point.

Nevertheless, the title="LSE" href="http://www.londonstockexchange.com"

target="_blank">LSE should be congratulated on the

vigour with which it has responded to the challenges it faced,

and it will be interesting to see how the chart looks in the

first 6 months of 2011 once it has it shiny new title="Millennium Exchange"

href="http://www.londonstockexchange.com/traders-and-brokers/products-services/millennium-exchange/millennium-exchange-migration/millennium-exchange-migration.htm"

target="_blank">Millennium Exchange matching

technology in place.