June 18, 2008

A new industry benchmark research study published by TABB Group, European Equity Trading 2008: Liquidity, MiFID and the Brokerage Relationship, says that low-touch electronic trading across the European equity markets will account for nearly 2.1 billion euros in commission revenue by 2010, up from 1.8 billion in 2008. Although use of sales traders across European market centers will continue to decline at a rate of nearly 10%, the belief that the European sales trader is passe is unfounded, says the TABB Group, in a press release, adding that while the trader's role has changed over the past 10 years, it will not disappear.

"New trading venues are beginning to emerge, promising faster executions, lower costs and a variety of different structures," writes Kevin McPartland, senior analyst at TABB Group and the study's author. Crossing networks bring the hope of the block trade. Alternative-displayed markets want to attract electronic liquidity providers to a pan-European trading platform, and over 75% of UK buy-side traders, for example, are connected now to crossing networks with the rest of Europe following a similar path. However, he adds, if innovation and competition bring new forms of liquidity, it will become inherently harder to find. As new trading venues siphon market share from established exchanges, a more fragmented market will be born. "Where all trading was once concentrated at the primary exchange, it will become necessary to examine the new multi-lateral trading facilities (MTFs) to ensure receipt of the best price," says McPartland in the release.