European fragmentation in focus
First Published Friday, 5th August 2011 02:03 pm from Fidessa : Steve Grob
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It's been interesting to watch the European MTFs
jockeying for position over the summer. Seems like title="Chi-X"
target="_blank">Chi-X is continuing to grow its
market share of all European indices fairly steadily, whilst the
target="_blank">Bats Europe and the LSE's title="Turquoise"
target="_blank">Turquoise could be starting to
invert. href="http://fragmentation.fidessa.com/wp-content/uploads/Focus3.png"> class="aligncenter size-full wp-image-2823" title="Focus"
alt="" width="621" height="333" />
platform attracting the HFT folks, or perhaps
it's simply that the market is rebalancing itself in
Europe. Assuming that
target="_blank">Chi-X do complete their merger, then
it's only natural for the combined volume to shrink back a bit as
there will be fewer order books around to make prices or match
target="_blank">Turquoise has also learnt the
effectiveness of price promotions, especially in seizing market
target="_blank">NYSE Euronext and title="Deutsche Börse"
On this point, it's also worth taking a look at title="Deutsche Börse"
target="_blank">Deutsche Börse's own
Although total volumes are still modest, it looks like the
Germans have learnt the same lesson about focus and how it is the
key to wresting market share from your competitors. The chart
target="_blank">XIM in most indices has fallen, it
is making really good progress in Italy and growing its share of
the FTSE MIB.
href="http://fragmentation.fidessa.com/wp-content/uploads/XIM1.png"> class="aligncenter size-full wp-image-2825" title="XIM"
alt="" width="511" height="349" />
By focussing all your efforts on one index, it's
possible to create real momentum and compel participants to
consider your alternative venue in their routing tables. This is
Europe's approach and was why it was able to
be so successful without being either first (like title="Chi-X" href="http://www.chi-xeurope.com/home/home.asp"
target="_blank">Chi-X) or having ready-made
Finally, when will something ever happen in Spain? I
target="_blank">IBEX but as you can see it's hardly
budged. Despite promises to open up clearing, the title="Bolsa de Madrid"
target="_blank">Bolsa de Madrid still has over 98%
share of its primary index. Given that the Spanish market is the
sixth largest in Europe (based on our data for July) it would
seem to be a prize that both primary and alternative venues
should be striving for. I wonder if we'll see things change in
Spain by the end of the year and, if so, whether it will be one
of the pan-European MTFs that dominates that market or a local