|
The Markets in Financial Instruments Directive (MiFID), with less than two months to go before its November 1st implementation, has opened up the trade reporting market, breaking the current monopolies held by national stock exchanges. As a result, national exchanges have fought back reducing the fees that they have previously charged for these services.
Reporting of trades is obligatory under current and future regulations. However, to date, most trades and all reporting was via national exchanges. Trade reporting fees have been a lucrative source of income for exchanges producing around a third of revenues. MiFID has broken these monopolies and allows trades to be published anywhere and new services are being planned to take advantage of this liberalisation. Project Boat, a consortium of around 8 major banks, with other banks committed to being clients, is the most visible competitor in this area and has vowed to slash trade reporting fees.
Exchanges have fought back with fee reductions as well as new services. The latest exchange to do so is the OMX Nordic Exchange which last week announced that it is to halve its trade reporting fees for the Stockholm, Copenhagen and Helsinki Exchanges as of the MiFID implementation date. This is in addition to a cut of 50% made last April. This follows the trend of exchanges reducing their fees - the London Stock Exchange (LSE) dropped its reporting fees by some 80% earlier this year. Both OMX and the LSE have announced improved new services as well as the fee reductions.
The question is whether exchanges will be able to bear the reductions in revenues – also a problem for other organisations dependent on these fees such as the UK’s Takeover Panel which currently receives a third of its operating income from levies on the LSE’s trade reporting fees, a source that may not be forthcoming from the new players in this area.
| 
