The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Exchanges have little to fear from competition

Imminent competition between execution ventures is likely to mean more trading and therefore more money for everyone.

Another quarter, another set of record results for exchanges. Quite frankly it’s no wonder brokers are keen to see competition.

The correlation between trading volumes and exchanges’ earnings is clear. Average daily volume at the London Stock Exchange rises by 58% and its profit before exceptionals rises by 55%; the number of transactions on Deutsche Börse’s Xetra platform rises by 49% and its ebitda rises by 47%. For exchanges, more trading means more money.

Yet the same is pretty much true for investment banks’ execution businesses. Unbundling has turned execution into a purely volume-driven business, where profitability comes from economies of scale, so more trading also means more money to investment banks, too, particularly as they use technology to turn themselves into what looks more and more like an exchange or alternative trading system.

Luckily for investment banks and exchanges alike, the imminent competition between execution venues is likely to mean more trading and therefore more money for everyone. New venues with faster, better technology and lower operating costs and fees should help to make the market more attractive to statistical arbitrage funds that trade high volumes, which depend on high speeds and low costs to be economical.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree