Cross-border Equities Trading in Europe: Why Jiway Never Had a Chance

October 11, 2001

Abstract

Boston, MA, USA Paris, France October 10, 2001

Cross-Border Equities  Trading in Europe

Celent predicts the demise of Jiway, as expected retail cross-border equities order flow fails to materialise.

In a new report entitled “ ,”  Celent Communications closely examines the obstacles faced by those investors interested in conducting cross-border equities trading in Europe. In the process, the report features three new initiatives aimed at lowering the barriers to cross-border equities trading: Jiway, virt-x, and MLX MarketEdge.

With the introduction of the euro, there has been increased emphasis on creating a more centralized financial market in Europe. To date, cross-border equities trading in Europe costs five times as much as a typical cost of trade in a domestic market. The major problem has been with Europe’s silo-based clearing and settlement infrastructure, which has failed to follow the footsteps of the wave of consolidation sweeping the various exchanges in Europe. 

According to Sang Lee, the author of the report, “A major obstacle to stimulating cross-border trading has been the severely fragmented nature of Europe’s clearing and settlement organizations. As a result, despite having sophisticated electronic exchange platforms designed to lower trading costs, the absurdly high costs of settling each trade has limited cross-border equities trading to only the biggest broker-dealers in Europe.”

He goes on to add that, “Various alternative execution platforms, such as Jiway, virt-x, and MLX MarketEdge, were designed to take advantage of the fragmentation that currently exists in the European financial market infrastructure. However, these are only temporary solutions…pressures from these platforms, coupled with internal business decisions will ultimately lead to exchanges and clearing and settlement organizations creating a less fragmented market structure to efficiently accommodate cross-border trading in Europe. When this happens, niche ventures like Jiway, which is already struggling with its lack of retail order flow will either have to change its business model or simply close shop.”

A Table of Contents is available online.

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA October 11, 2001

Cross-Border Equities Trading in Europe

Return to Abstract

EXECUTIVE SUMMARY 3
INTRODUCTION 4
MARKET OVERVIEW 5

 

Cross-Border Equities Trading

5

 

Clearing and Settlement in Europe

7

 

Too Much Hype?

11

CROSS-BORDER TRADING PLATFORMS 13

 

MLX Marketedge

13

 

Jiway

16

 

VIRT-X

19

FUTURE TRENDS 22

 

        

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