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The Luck of the Irish

Looks like it’s Ireland’s turn to run the gauntlet with the MTF community. Pretty much all the MTFs - Chi-X, BATS, NASDAQ OMX Europe and Turquoise - have announced that they will be trading Irish stocks from now on. For this reason we have now included the Irish Stock Exchange (ISE) and its accompanying index (ISEQ) on the FFI website. A quick look revealed that many Irish stocks are in fact traded on the LSE and so Dublin’s market share of its main index is less than 30 percent already.

This is a good pointer to the decoupling that is occurring between indices and their parent exchanges. In Dublin’s case it’s got nothing to do with MiFID but the simple fact that the LSE is the bigger marketplace for some of the large cap Irish stocks (which make up the ISEQ index). For other indices, such as the FTSE 100, the CAC 40 and the DAX, we are slowly but surely seeing them decouple from their parent exchanges and start to exist in their own right. The more this continues to happen, the happier the MTFs will be as this helps to break apart the concept that any given stock or index should “belong” to a specific exchange in terms of trading.

As this process continues, country-specific indices may become less relevant as we are all increasingly forced to adopt a more pan-European perspective. In time the S&P Europe 350, the FTSE Developed Europe Ex UK Index or sector-specific indices like the Dow Jones EURO STOXX® Telecommunications index may well become more relevant than the current crop of country-specific indicators.

I guess when this has happened you could say that MiFID will have done its job in terms of breaking down the national monopolies in equities trading across Europe.

Is it all over for Dublin as far as keeping hold of its current market share of ISEQ stocks? So far it’s too early to tell and, of course, there is nothing to stop the ISE reinventing itself as a pan-European venue and taking on the MTFs at their own game.


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