Earlier this week I attended a breakfast seminar ”IR Excellence: Increased trading competition – traditional exchanges are challenged by alternative trading systems”, hosted by the Swedish IR association (SIRA), in cooperation with Cision, Grayling and Setterwalls.
- Pros and cons with Multilateral Trading Facilities (MTF)
- Has MiFiD contributed to increase transparency?
- How will trading in alternative systems as Burgundy, Chi-X and Turquoise affect daily IR Practice?
Erik Thedéen agreed that MiFid to some extent has failed when it comes to improve transparency. He also stated that Nasdaq OMX Stockholm has lost about one third (30%) of their market shares to alternative trading systems the latest years, with Chi-X as the main competitor. But Nasdax OMX Stockholm consider this competition healthy as long as they are considered the main exchange in the Nordic region, i.e. holds more than 50 percent of the market.
According to Olof Neiglick from Burgundy, MifiD has contributed to lower spreads and lower trading costs for clients. On the other hand, IROs can no more trust the share data that is published in daily financial papers as they only report turnover from the main trading exchanges. His advice to IROs was to disclose how many percent of the company’s share that are traded at alternative systems in the Annual Report, website etc. There are free systems available today that provide data of how many percent of your share that is traded in Chi-X, Burgundy and other platforms.
Hans Hedström, HQ Asset Management stated that the trading procedures have become less transparent:
– “To day it’s a bit more like a black box”.
The panel also stressed some worries on how fragmented the market can become and if we will se the same trend in Europe as in the US where there are over 30 exchanges at the moment. See earlier blog post: Dark pools – Blurring the Big Picture and messing up volatility.
If Nordic IROs in the future regularly will have to scan over 30 exchanges to calculate their turnover that will most probably have an impact on their day-to-day routines.