The London Stock Exchange (the Exchange) has published a paper entitled MiFID in a pan-European market - A shared vision for the future. The paper covers how the Exchange will assist firms in relation to:
Pre-trade transparency obligations. In the paper, the Exchange states that it plans to use a combination of order book and quote functionality to provide a simple one-stop-shop service for all UK and EU liquid shares. SETS will be enhanced to allow for the publication of executable two-way market maker quotes, akin to SETSmm, whilst two-way non-executable quotes will be available for all EU liquid shares. The Exchange advises that the obligations associated with these quotes will be defined under its rules as a market operator. The Exchange believes that this approach provides a MiFID compliant solution and preserves firms’ ability to price improve where the trade is executed under the rules of a regulated market or multilateral trading facility.
Limit order display obligations. Many of the Exchange’s existing products already provide the ability to publish limit orders, namely SETS, SETSmm and Dutch Trading Service (DTS). These platforms cover securities from the FTSE100 to FTSE Small Cap indices with DTS covering securities traded on the AEX and AMX indices. In addition, the Exchange advises that it is launching a new platform, SETSqx, to facilitate limit order display for the FTSE Fledgling and remaining non-index securities listed on the Main Market. According to the Exchange this new trading service will use a hybrid approach, supporting quotes and the continuous display of limit orders with uncrossing during periodic auctions. By November 2007, all UK-regulated market securities admitted to trading on the Exchange will have limit order display facilities.
Best execution policy. The Exchange advises in the paper that it will offer a set of tools utilising its data mining products and central data storage to help firms demonstrate best execution to their customers. These tools will provide the official data necessary to identify and analyse trends, as well as the ability to monitor, assess and compare execution performance. In addition, Proquote, the Exchange’s market data and trading subsidiary is to introduce new services that will allow firms to assess best execution using data across all European exchanges and will allow statistics on transaction cost analysis to be reported.
Post-trade transparency obligations. The Exchange has been providing a UK reporting service for some time and plans to expand this service to EU securities at a competitive cost for both on Exchange and OTC trades. The Exchange also plans an enhancement to this service which will undertake the publication of trades in accordance with the new MiFID block trade reporting regime.
Transaction reporting obligations. In the paper the Exchange states that the Exchange Reporting Service (ERS) will be available to customers wishing to have a straightforward and cost-effective way of submitting transaction reports to the FSA.
Market data. In the paper the Exchange states that it will continue to aggregate data in UK securities as well as capturing trade information in EU securities. The Exchange will also ensure the data is published in accordance with MiFID. Furthermore the Exchange reports in the paper that it will continue to disseminate both UK and International Level 1 and 2 market data and in addition it will be providing a new data feed comprised solely of off book trade reports in all UK and EU listed securities.