Paris, France
5 June 2007 European
Exchanges Landscape
Report Published by Celent
Consolidation, MiFID, and competitive threats from alternative trading
systems will bring major structural changes to the European capital
market.
Despite consolidation within Europe and the recent transatlantic merger
between NYSE and Euronext, the European capital markets remain fragmented
along national boundaries, according to a new report from Celent, European
Exchanges Landscape. Further consolidation, the Markets in Financial
Instruments Directive (MiFID), and competition from alternative trading
systems (ATS) and dark pools of liquidity will continue to alter the
European capital market. Recent changes are already benefiting exchanges
in Europe. There has been a significant uptick in equities trading, with
2006 trading volumes up 35% from their 2005 level. Profit margins are
higher than US margins, with the average European exchange achieving a 34%
profit.
But European exchanges’ recent boom is threatened by
MiFID and new competitors. MiFID seeks to promote competition between
execution venues, namely exchanges, multilateral trading facilities (MTFs),
and firms internalizing their orders. Thus, ATSs, which are MTFs, see
MiFID as an opportunity to compete with European exchanges. However,
European exchanges will strongly defend their positions.
"ATSs do not represent an immediate threat for exchanges because
the leading ATSs in Europe have not been able to attract significant
liquidity," says Perrine
Fiorina, analyst at Celent and coauthor of
the report. "In fact, having the authority to establish an ATS does
nothing to ensure ability to attract order flow."
Other key findings of the report include:
- European exchanges have not been able to attract bond
trading.
- In Europe, the average transaction size on electronic order book
remained constant over the past three years at nearly €29,000,
significantly higher than the US average, which in 2006 was
approximately €13,600 on NYSE and €6,700 on Nasdaq.
- In 2006, the European IPO market was dominated by the London Stock
Exchange, which represents 53% of all European IPOs.
- LSE is the largest exchange in terms of equity trading value,
accounting for 36% of European trading turnover and 20% of trading
volume.
This report also provides an analysis of the major exchanges’
strategies for equities and derivatives trading, market data, MiFID, and
competition with ATSs.
A table of contents
is available online. The 48-page report contains 29 figures and 8
tables.
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