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Yesterday, Instinet Europe released trade execution figures showing smart order routing to new execution venues has delivered clients significant benefits in the year since the introduction of MiFID and the multilateral trading facilities (MTFs) in November 2007.
Instinet Europe, part of Nomura and one of Europe’s largest agency brokerages, says that an average saving of 4.91 basis points has been achieved in the past year and that the actual benefit has risen from an initial 1.73 bps in November 2007 to 6.06 during the final quarter.
This benefit comes with market share being diverted from the traditional London, Paris, Frankfurt and Amsterdam equities exchanges with, by value traded, 40% of Instinet Europe executions being on the new facilities in October 2008, compared to 11% twelve months ago. In UK equities alone at the end of the first year Instinet Europe says it executed 45% of its volume off the London Stock Exchange, compared to 14% in November last year.
Instinet says its clients received price improvement 55% of the time (by value traded) and executed at the same price or better on the primary markets 96% of the time over the final quarter of the period.
Richard Balarkas, CEO of Instinet Europe said, “We believe that both the new and emerging pools of liquidity offer tremendous opportunities for price improvement. As an agency-only broker, our sole aim is to hunt out the best possible execution opportunities for our clients with the continual refinement of our sophisticated smart order router and commitment to connect to new liquidity venues. Next year is going to prove interesting, as we anticipate more new entrants and the quest for liquidity between the MTFs themselves is only set to heighten.”
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