MiFID, Reg NMS and Competition Across Trading Venues in Europe and United States
Journal of Financial Regulation and Compliance, Forthcoming
Posted: 15 Jan 2009 Last revised: 15 Sep 2009
Date Written: March 18, 2009
Although MiFID and Reg NMS share the common objective of enhancing competition in securities markets, they differently regulate the best execution duty, the consolidation of market data and the publication of execution quality information. These differences are particularly relevant since they affect the competition for order flow across trading venues. In particular, some of the provisions set forth by the US regulation appear to be more pervasive, compared to the EU ones, in strengthening competition for order flow among trading venues.
The paper also provides an investigation of the degree of market fragmentation among incumbent exchanges and new trading venues in European and US securities markets, and suggests possible explanations for understanding the current macrostructure of such markets.
Keywords: Regulation NMS, MiFID directive, Best execution, Market data consolidation, Fragmentation
JEL Classification: G15, G18, G24
Suggested Citation: Suggested Citation