The Gateway to Algorithmic and Automated Trading

ITG survey: European trading under MiFID 2

First Published 3rd January 2018

New survey finds buyside expects more block trading and robust off-exchange liquidity

London and New York - ITG, the independent broker and financial technology provider, has released a survey of buyside traders about how Markets in Financial Instruments Directive 2 (MiFID 2) is likely to impact European trading liquidity in 2018. The December 2017 survey polled more than 50 buyside institutional investors who trade European equities.

Survey Findings:

  • Block Boost: Block trading volumes more than doubled in 2017. The majority of traders polled - more than 80 per cent - expect strong block volume growth in 2018, while fewer than 20 per cent expect block volume to remain flat or shrink under MiFID 2. More than 86 per cent of traders surveyed expect to interact with block trading venues in 1Q 2018.
  • Off-Exchange Strength: Dark pools and MTF periodic auctions currently make up almost 10 per cent of total European trading. By the end of Q1 2018, most of those surveyed (61 per cent) expect dark/periodic auction MTF liquidity to grow to 12 per cent or more of total trading, 23 per cent of traders expect it to remain around current levels while 16 per cent expect it to shrink to below 8 per cent. Overall, more than 82 per cent of traders polled plan to interact with dark MTFs in Q1 2018, while 80 per cent plan to interact with periodic auctions.
  • Block Boost: Block trading volumes more than doubled in 2017. The majority of traders polled - more than 80 per cent - expect strong block volume growth in 2018, while fewer than 20 per cent expect block volume to remain flat or shrink under MiFID 2. More than 86 per cent of traders surveyed expect to interact with block trading venues in Q1 2018.
  • Enter the SIs: Banks and electronic liquidity providers (ELPs) have registered to establish approximately 100 systematic internalisers (SIs) under MiFID 2. Some 88 per cent of traders surveyed expect that there will be fewer than 10 relevant ELP SIs in operation at the end of 2018, while 42 per cent expect there will be fewer than 5. Bank-run SIs look to be the more popular choice, with two thirds of traders expecting to interact with Bank SIs in 1Q 2018 versus fewer than 40 per cent for ELP SIs.
  • Overall Liquidity: Opinion is split on how MiFID 2 will impact a trader's ability to access quality liquidity. 37 per cent of those polled expect it to become harder, 18 per cent say it becomes easier while the remaining 45 per cent expect no significant impact.
  • Copyright © Automated Trader Ltd 2018 - Strategies | Compliance | Technology

click here to return to the top of the page
content