European equity MTFs and their post-trade arrangements

It is not easy to find a single reference source for European equity MTFs and their post-trade services, so we have compiled this table. We have tried to make it comprehensive and accurate (but please inform us of any omissions or inaccuracies so we can correct it.)

The conclusion that leaps out from the table is that the most significant factor contributing to fragmentation in European equity markets is the fragmentation of post-trade arrangements. The MTFs in this table use a variety of different central counterparties or in some cases no central counterparties at all. (Not to mention that there is virtually no overlap between the CCPs used by the MTFs and the CCPs used by national exchanges.)

It must undermine the efficiency of markets if two trades in an identical security have to follow different paths to their eventual settlement, just because they happen to be executed in different venues. So far there is little to show from the interoperability promised under the European Code of Conduct. LCH.Clearnet and EMCF signed an interoperability agreement in September last year, but this was blocked by regulators. In February, European regulators established a framework for approving interoperability arrangements between CCPs  (as reported by the FT) but no arrangements have yet been put in place.

When the SEC published a discussion paper on equity market structures in the USA, it contained just one paragraph on the post-trade arrangements. A similar paper in Europe would have to devote a great deal more space to what happens after the trade is done.

Equity MTFs in Europe and their post-trade arrangements

Dark or Lit Share of total European trading[1] Post-trade arrangements 
Chi-X D&L 8.13% x
BATS Europe D&L 2.25% x x[2]
Turquoise D&L 1.54% x
Nasdaq OMX Europe L 0.42% x
Liquidnet D 0.18% ?
POSIT D 0.10% Settled through ITGL
NYSE Arca Europe L 0.09% x
Burgundy L 0.08% x
Smartpool D 0.02% x[3] x[4]
Nomura NX D 0.02% Settled through Nomura
Equiduct L 0.00% Domestic market CCPs
BlockCross D 0.00% Settled through ICAP Securities
Quote MTF L NA x
UBS D Not yet  launched CCP not identified yet

[1] Jan 2010, source: Thomson Reuters

[2] Ireland only

[3] Securities not listed on NYSE Euronext

[4] Securities listed on NYSE Euronext

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