Wednesday, February 14, 2007

Just in time for MiFID

Just in time for MiFID and perhaps just in time for those sell-side firms that are contemplating setting up alternative execution venues to rival the exchanges, the London Stock Exchange (LSE) has finally announced what it plans to offer firms around the Markets in Financial Instruments Directive (MiFID).

Sell-side investment banks under the guise of Project Turquoise have threatened to set up a multilateral trading facility offering faster and cheaper execution of trades than the LSE. Also Equiduct, which is based on the old EASDAQ platform, has announced its plans to establish a pan-European exchange in response to MiFID.

The banks behind Project Turquoise have been accused by sceptics of "sabre rattling", and we may soon establish whether that is the case or not with the LSE dangling a rather 'attractive' carrot in the faces of the disgruntled sell-side firms with its latest announcement, which promises "new market leading technology, an enhanced suite of trading services" and, wait for it, "an attractive new tariff structure."

According to Computing, the LSE has been undergoing somewhat of an IT overhaul, implementing a "real-time" dashboard so LSE staff can better respond to customer enquiries. Apparently it has also implemented a new information reporting system, presumably in response to the pre- and post-trade reporting requirements under MiFID, and the piece de resistance, its new supposedly speedier trading platform, TradeElect.

In terms of pre-trade reporting, the LSE will extend its existing market making quoting facilities to encompass all EU securities, and on the post-trade side, it vaguely refers to enhancements, although with investment firms complaining about how much it costs to report trades to the exchange, it is questionable whether the LSE's efforts will be enough to prevent investment banks like Merrill and Citi going ahead with their alternative trade reporting system, Project Boat (where do investment banks come up with these names?)

Will the LSE's rather belated and vague MiFID announcement be enough to stop the sabre rattling of investment banks? It is anyone's guess, but me thinks it would be foolish for the investment banks, who have made a big deal about exchange tariffs to back down now before the Day of the M {MiFID} has even arrived.After all a little competition is always healthy, they say.

1 comment:

Anthony Roberts said...

I've just found a series on Mifid at

It is free too and you can download the interviews or play them on line which is pretty cool, since you'd normally only get stuff of this quality by attending an event.