Major Changes in US and European Equities Markets: Comparing MiFID and Reg NMS

May 17, 2006


Paris, France New York, NY, USA May 17, 2006

A new study examines and compares the major changes looming for equities markets in Europe and the US.

Reg NMS (Regulation National Market System) in the US and MiFID (Markets in Financial Instruments Directive) in Europe are ushering in major changes in the structure of the equities markets. Although frequently cited together, these two new pieces of regulation are frequently misunderstood, and differences between them abound. The report examines the most important components of Reg NMS and MiFID and discusses the resulting market structures, including:

  • Best execution requirements
  • Market data
  • The role of exchanges and concentration rules
  • Conduct of business rules
  • Unbundling

Although European markets generally tend toward greater regulation than US markets, the roles here are reversed.

"Underpinning the European Commission痴 approach is a belief that regulators are not well-positioned to design market micro-structure, but should leave this to market forces. The SEC is taking a far more hands-on approach, with a level of detail and complexity that is sometimes surprising," says Octavio Marenzi, CEO of Celent and author of the report.

In addition to comparing and contrasting the regulations, the report examines where new business opportunities lie for market participants in the following areas:

  • Sales of market data
  • Algorithmic quoting
  • Internalisation
  • Execution services

The 23-page report contains three figures and three tables. A table of contents is available online. Members of Celent's Retail Securities & Investments and Institutional 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 New York, NY, USA May 17, 2006

Executive Summary 3
Introduction 4
Reg NMS 5
  Market Failures in US Equities Trading 5
  Major Elements of Reg NMS 7
MiFID 10
  Overview 10
  Major Elements of MiFID 11
Comparison 14
  Differences Pre-MiFID and Pre-Reg NMS 14
  Differences Post-MiFID and Post-Reg NMS 15
Opportunities 18
Conclusions 20
Glossary 21
Objectivity & Methodology 22

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