Are we still fighting for a truly integrated Pan-European market?

Christian VoigtThe harmonisation and consolidation of European markets was truly a hugely successful project for European financial markets within the last few years. We enjoyed massive innovation, growth and new opportunities. Think about it, without MiFID, Chi-X, BATS, European Multilateral Clearing Facility (EMCF), and the Fragulator we would still have to pay ridiculous high exchange fees and consider interoperability as some unrealistic academic fantasy and count from 1 to 10 while waiting for a response from the exchange for our inserted order.

However, looking lately at the Fidessa Fragmentation Index, I’ve got the feeling that changes in the last 6 month are marginal at best. It seems that fragmentation has ground to a halt and home markets enjoy a solid market share of 50% to 60%. This is quite interesting, given that the fee levels of home markets are still significantly above any pan European MTF. Furthermore, today Guiseppe Vegas, head of Consob (Italian financial regulator), said in a FT article “The merger of the LSE and Borsa Italiana could be a good thing but it has not yet demonstrated good effects.”  He continues, “There are not many capital flows from Britain to Italy and from Italy to Britain. If I have the terrain and you have the seeds, you must give the seeds to me.” Therefore, I couldn’t help but wonder: Are we reverting instead of progressing? Will only half of the European market become truly Pan-European?  How does it impact the current MiFID review, if regulators stop believing in the European idea?

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