European Trading Under MiFID II: New Survey Finds Buyside Expects More Block Trading and Robust Off-Exchange Liquidity
- Block Boost: Block trading volumes more than doubled in 2017. The majority of traders polled - more than 80% - expect strong block volume growth in 2018, while fewer than 20% expect block volume to remain flat or shrink under MiFID II. More than 86% of traders surveyed expect to interact with block trading venues in 1Q 2018.
- Off-Exchange Strength: Dark pools and MTF periodic auctions currently make up almost 10% of total European trading. By the end of 1Q 2018, most of those surveyed (61%) expect dark/periodic auction MTF liquidity to grow to 12% or more of total trading, 23% of traders expect it to remain around current levels while 16% expect it to shrink to below 8%. Overall, more than 82% of traders polled plan to interact with dark MTFs in 1Q 2018, while 80% plan to interact with periodic auctions.
- Enter the SIs: Banks and electronic liquidity providers (ELPs) have registered to establish approximately 100 systematic internalisers (SIs) under MiFID II. Some 88% of traders surveyed expect that there will be fewer than 10 relevant ELP SIs in operation at the end of 2018, while 42% expect there will be fewer than 5. Bank-run SIs look to be the more popular choice, with two thirds of traders expecting to interact with Bank SIs in 1Q 2018 versus fewer than 40% for ELP SIs.
- Overall Liquidity: Opinion is split on how MiFID II will impact traders’ ability to access quality liquidity. 37% of those polled expect it to become harder, 18% say it becomes easier while the remaining 45% expect no significant impact.
MiFID II Solutions
MiFID II is the biggest change to European equity market structure in a generation. ITG is committed to partnering with clients as they navigate the far-reaching impacts on liquidity, unbundling, and best-execution requirements. Key offerings include our POSIT Alert block crossing network, POSIT Auction, our Dark algorithm, the broker-neutral Dark Allocator and
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Source: Investment Technology Group, Inc.