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Inside investment: Minimal-liquidity trading fragmenters

MTF (that’s multilateral trading facilities to you and me) is about to become the acronym of the autumn, with umpteen new systems launching in Europe. It might be bad news for the incumbent exchanges; is it good news for anyone?


There is a very old joke about a couple motoring to a lunch party in the English countryside. They end up getting hopelessly lost. Just when they are starting to truly despair, they happen upon a local rustic, the wisdom of ages etched upon his face. They tell him of their lunch-time rendezvous, asking for directions. "Well," he replies, "if I were going there I wouldn’t be starting from here."

A quick glance over the Atlantic at the fragmented, complex, bits-and-pieces nature of institutional equity trading would surely provoke most European buy-side traders to say they wouldn’t want to be starting from there. However, following fizzy pop (that’s soda for US readers), chewing gum, shopping malls and High School Musical, it looks as if another piece of unwelcome Americana might soon be washing up on Europe’s shores.

Cheaper trading promised

In September, the much-heralded Turquoise is set to begin trading European equities. This initiative, dreamt up largely by US investment banks, promises to make equity trading cheaper by breaking the long-entrenched quasi-monopolistic position of the established exchanges. It is not alone. This is a bandwagon that seems irresistible and unstoppable.

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