The recent slew of exchange announcements introducing new dark trading facilities in response to MiFID II would appear to suggest that the regulation has triggered a whole raft of innovations. But is that what’s really happening here?
Euronext tells us it is planning to introduce a new
liquidity discovery service building on its existing iceberg orders. Looking at the detail, this appears fairly similar to the
Volume Discovery Order announced shortly before by Deutsche Boerse. While Deutsche Boerse can certainly claim to be the first to publish its iceberg extension plans, these may not be quite so “new” after all. An
academic paper authored by past and present Deutsche Boerse employees discussing this very idea was posted online in 2008, long before we knew about MiFID II.
BATS Europe is promoting its partnership plans with BIDS Trading to provide a MiFID II compliant way to interact with buy-side IOIs. While the technical details under
the hood might differ, it bears some resemblance to the SIX-Liquidnet partnership
SLS – launched back in 2011 – which is another example of an exchange partnering with a buy-side block trade network.
We could argue whether any of these initiatives are new innovations or not, but let’s not forget that even the
Apple iPod wasn’t the first of its kind. Sometimes, true innovation is just the better timing of a good idea.