In a white paper, Bats claims analysis of data from the two outages at the LSE last month shows MTFs now offer sufficient price formation and liquidity for regular trading, even in the event of a listing market outage.

Bats says the first of last month's LSE outages, on 9 November, saw strong trading on MTFs, with levels approaching that which would have otherwise been expected from the exchange and its competitors combined.

This was not the case during the 26 November outage, when liquidity did not migrate to MTFs in any meaningful way.

Bats blames this on the LSE's move to place its system into auction mode, generating market data that "did not represent legitimate trading interest or available liquidity".

Despite this, the MTF says trading systems processed the data as valid liquidity and thus hindered market participants' ability to redirect order flow to alternative venues.

Paul O'Donnell, COO, Bats Europe, says: "We believe there is a need for a clear market outage protocol to ensure consistency so that market participants can plan for such scenarios and that trading will remain orderly."

The MTF proposes that:

• Market centres experiencing difficulty should provide concise, accurate and timely information to participants (including competing market centres).
• When a market is unable to trade, it should close and clear all order books (thus giving participants certainty about their position and therefore giving them a choice to trade elsewhere).
• During an outage, market centres should refrain from distributing data which suggests there is liquidity.
• Once a resolution is reached, market centres should signal a clear re-opening time to participants. The re-opening may (depending on market practice) be preceded by an auction, but this auction should represent live liquidity and should be brief (we suggest no more than 10 minutes).

Bats follows Chi-X in criticising the LSE for using the auction mode. At the time, Europe's largest MTF issued a statement saying: "We call for the LSE and any other market of listing to close their market outright when outages occur in order to allow market participants to continue trading."

However, there is still doubt over whether traders are comfortable without the primary market. In a Finextra blog, Steve Grob, director of strategy at Fidessa acknowledges the impact of the auction mode on MTF trading volumes but says "traders are still reluctant to use MTFs without the comfort of knowing that the primary market is open at the same time. Market makers, too, are reluctant to make prices when the primary is down and so this further encouraged traders to stay at home rather than go and play on the MTFs."

Yesterday investment body the CFA Institute said it finds "no empirical evidence" to suggest market fragmentation has had any material impact on the quality of the price formation process for equities traded under the MiFID regime but revealed a poll of 962 investor members found concerns centring on the difficulty in obtaining a complete and clear picture of market prices.