Around 16% of European share trading is over-the-counter (OTC), far less than claimed by stock exchanges, according to a study from the Association for Financial Markets in Europe (Afme).
In the wake of the financial crisis, European regulators are bidding to increase transparency in OTC trading as part of an overhaul of Markets in Financial Instruments Directive (MiFID).
Earlier this month the Federation of European Securities Exchanges sought to influence the debate by hitting out at broker networks, calling for bank-operated platforms to come under the same regulatory scrutiny as bourses.
Now Afme, a trade group representing the banks, says a study it has conducted shows that claims about the level of trading carried out away from exchanges has been grossly overstated, with OTC accounting for just 16%, not the widely reported 40%.
This is because 60% of all OTC equity trades reported between 2008 and 2010 were duplicates already reported elsewhere - a discrepancy "due to the failure of MiFID reporting rules to differentiate between genuine and technical trade reporting".
Christian Krohn, MD, equities, Afme, says: "MiFID has transformed the European equity market landscape but the current reporting requirements cause confusion and can result in misleading claims, as our research shows. This is of concern as it suggests that policy decisions are driven by misinformation or misunderstanding."