Competition between Financial Markets in Europe: What Can Be Expected from MiFID?
KU Leuven - Faculty of Business and Economics (FBE); CentER, European Banking Center (EBC), TILEC, Tilburg University; Centre for Economic Policy Research (CEPR)
January 15, 2009
Financial Markets and Portfolio Management, Vol. 23, No. 1, pp. 93-103, 2009
The Markets in Financial Instruments Directive (MiFID) could be the foundation of new trading platforms in Europe. This contribution employs insights from the theoretical and empirical literature to highlight some of the possible implications of MiFID. In particular, we argue that more competition will lead to more liquid markets, reflected in lower bid–ask spreads and greater depth. It will also lead to innovation in incumbent markets and stimulate the design of new trading platforms. MiFID has already introduced more competition, as evidenced by the startup of Instinet Chi-X, the announcement of new initiatives, including Project Turquoise and BATS, and the reactions of incumbent exchanges.
Keywords: Financial regulation, Market microstructure, MiFID, Trading systems
JEL Classification: G18Accepted Paper Series
Date posted: June 20, 2010
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo4 in 0.375 seconds