A long time ago in a galaxy far, far away…

It is a period of calm, with primary exchanges enjoying relatively little competition thanks to concentration rules enforced in many EU countries requiring all equity business to be conducted on exchange. The arrival of a new disruptor, in the form of MiFID I, is about to turn their lives upside down forever. The blanket ban on concentration rules will allow many newcomers to start competing for business, introducing a multitude of innovations and fragmenting and reshuffling order flow across Europe.

Fast forward 7 years. The global financial crisis has reset priorities away from innovation, efficiency enhancements and business growth, back to safety, security and compliance. When completed, the ultimate legislation – MiFID II – will re-introduce the concentration rule cleverly disguised as the trading obligation. With brokers once again forced to trade on-exchange, the legislation spells trouble for most OTC trading in European equities.