European Exchanges Landscape

June 5, 2007


Paris, France

Consolidation, MiFID, and competitive threats from alternative trading systems will bring major structural changes to the European capital market.

Despite consolidation within Europe and the recent transatlantic merger between NYSE and Euronext, the European capital markets remain fragmented along national boundaries, according to a new report from Celent, . Further consolidation, the Markets in Financial Instruments Directive (MiFID), and competition from alternative trading systems (ATS) and dark pools of liquidity will continue to alter the European capital market. Recent changes are already benefiting exchanges in Europe. There has been a significant uptick in equities trading, with 2006 trading volumes up 35% from their 2005 level. Profit margins are higher than US margins, with the average European exchange achieving a 34% profit.

But European exchanges' recent boom is threatened by MiFID and new competitors. MiFID seeks to promote competition between execution venues, namely exchanges, multilateral trading facilities (MTFs), and firms internalizing their orders. Thus, ATSs, which are MTFs, see MiFID as an opportunity to compete with European exchanges. However, European exchanges will strongly defend their positions.

"ATSs do not represent an immediate threat for exchanges because the leading ATSs in Europe have not been able to attract significant liquidity," says Perrine Fiorina, analyst at Celent and coauthor of the report. "In fact, having the authority to establish an ATS does nothing to ensure ability to attract order flow."

Other key findings of the report include:

  • European exchanges have not been able to attract bond trading.
  • In Europe, the average transaction size on electronic order book remained constant over the past three years at nearly O29,000, significantly higher than the US average, which in 2006 was approximately O13,600 on NYSE and O6,700 on Nasdaq.
  • In 2006, the European IPO market was dominated by the London Stock Exchange, which represents 53% of all European IPOs.
  • LSE is the largest exchange in terms of equity trading value, accounting for 36% of European trading turnover and 20% of trading volume.

This report also provides an analysis of the major exchanges' strategies for equities and derivatives trading, market data, MiFID, and competition with ATSs.

A table of contents is available online. The 48-page report contains 29 figures and 8 tables.

Members of Celent's Institutional Securities & Investments and Retail Securities & Investments research services can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.  

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 operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Paris, France

Executive Summary 3
Introduction 4
Market Overview 5
  A Fragmented Market Despite Consolidations 5
  Revenue Structure 6
Exchange Trading Services 9
  Equities Trading 9
  Transaction Tariffs 13
  Derivatives Trading 16
  Fixed Income Trading 19
Other Exchange Services 20
  Listing Services 20
  Information Technology Services 21
  Clearing, Settlement and Custody 22
  Trends in Market Data 23
Impact of Alternative Trading Systems 26
  Leading ATSs in Europe 28
  Emerging ATSs in Europe 33
  Future Impact of ATSs 35
Impact of MiFID 38
  MiFID Requirements 39
  Dark Liquidity and ATSs 41
  Internalisation Practices 44
  Buy Side and Trading Options 46
Conclusion 48


Sign in to download reports and access personalized information