The European Union’s forthcoming Markets in Financial Instruments Directive (MiFID) is already starting to drive market change, with a group of investment banks announcing they would be launching a competitive trade reporting service. Amongst the benefits that MiFID will bring is the ability to offer alternative and competitive trading and trade reporting facilities across the EU. This is part of the “level playing field” commitment that the European Commission has set as one of its objectives. This allows new entrants to offer competitive services to already established trading exchanges and service providers.
Last week, eFinancial News reported that a group of investment banks had announced that they would join forces to create a trade reporting system in competition to services currently offered by the London Stock Exchange (LSE) and Virt-X. It is thought that the banks, led by Merrill Lynch, Citigroup, Morgan Stanley and UBS, were irritated by the fact that the data providers were charging for information on trades when this information had already been provided by the banks. In 2004, the Office of Fair Trading had already made the LSE cut its fees to listed companies. However the project, named Project Boat, is in its early stages and, in any case, would be unlikely to be implemented before the 1st November 2007 live date for MiFID.
A spokesperson for the LSE, who have the lion’s share of London trade reporting, said that trade reporting was only a small part of the SE’s broker services. She added that, contrary to MiFID being seen as a threat to the LSE, it was an opportunity for them to grow their own revenues by offering trade reporting services across Europe and taking business from other exchanges.
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