Research on Competition and Regulation in European Equities Trading: An Executive Summary

Posted: 20 Jun 2010

See all articles by Andreas Storkenmaier

Andreas Storkenmaier

Karlsruhe Institute of Technology

Martin Wagener

Stuttgart Stock Exchange

Date Written: June 9, 2010

Abstract

Since the implementation of the European Markets in Financial Instruments Directive (MiFID), multilateral trading facilities (MTF) have broken down the quasi-monopoly which has been traditionally held by national exchanges across Europe. To date, incumbent exchanges and various MTFs fiercely compete for order flow in European equities. Naturally, there is tension between those in favor of order flow consolidation on a single market and those demanding competition. In contrast to U.S. Regulation NMS, single trading venues across Europe are not formally integrated and best price policy is not enforced. According to MiFID, competition is based on multiple factors for instance price, trading costs, speed, or probability of execution. In this executive summary we present an overview over recent developments in European equities trading and related literature. Finally, we highlight our research ndings which shed light on the questions of trading venue competition between regulated markets (RM) and MTFs, market quality and price discovery in fragmented markets, investors' choice of trading venue, and regulatory issues.

Keywords: MiFID, Multilateral Trading Facilities, MTFs, Liquidity, Price Discovery, Competition, Fragmentation, Market Quality

JEL Classification: G10, G14, G18

Suggested Citation

Storkenmaier, Andreas and Wagener, Martin, Research on Competition and Regulation in European Equities Trading: An Executive Summary (June 9, 2010). Available at SSRN: https://ssrn.com/abstract=1626105 or http://dx.doi.org/10.2139/ssrn.1626105

Andreas Storkenmaier

Karlsruhe Institute of Technology ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76131
Germany

Martin Wagener (Contact Author)

Stuttgart Stock Exchange ( email )

Börsenstraße 4
Stuttgart, 70174
Germany

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