New post-trade reporting figures published by Reuters show a “correction back in favour of the incumbent exchanges”.
In May, Markit BOAT, a European equities OTC (over the counter) trade reporting venue, claimed 22.08% of trade reporting for all European equities in terms of value (€490,778,896,503). This put it ahead of the London Stock Exchange (LSE) and the Deutsche Börse for the first time.
However, BOAT fell behind the traditional reporting venues according to Reuters’ figures for June, claiming just 18.11% of trade reporting value, compared to 18.52% from the LSE and 18.94% from the Deutsche Börse, which claimed the most.
In contrast, the LSE saw a jump in terms of total share volume for all European equities, from 27.24% in May to 45.52% in June. In the same period, BOAT accounted for 18.94% of share volume. The LSE figures for June incorporated post-trade reporting figures from the Borsa Italiana for the first time following the merger of the two exchanges in June 2007.
One reason for the shift in volume and value could be due to less liquid, higher margin stocks being reported more often on BOAT compared with the LSE. Andrew Allwright, head of marketing, exchange-traded instruments at Reuters, told theTRADEnews.com that the reporting preferences of major brokers might also be a factor. “Most of the large investment banks use Markit BOAT to publish their trades, so they will tend to focus, and be strongest on, the highest traded and most liquid stocks. Smaller local brokers won’t necessarily publish through BOAT.”
Allwright also added that the figures should be viewed in the context of current issues surrounding post-trade reporting since MiFID was introduced, such as an increase in the reporting of trades to more than one venue. “There is no way for us to confirm whether any trade is a duplicate. That is the responsibility of the reporting firms and what they are required to address under level three of MiFID. Some exchanges are not monitoring their OTC feeds and highlighting suspect trades to the reporting firms,” he said. “BOAT does this, as do we in our Trade Publication Service, but it’s difficult for data vendors and the people who use their data to identify whether all reported data is legitimate or not.”
Level three of MiFID relates to making sure the directive is implemented uniformly across all European member states.
The lack of transparency in post-trade reporting has been raised by a number of parties including the Investment Managers’ Association, which has called on the Financial Services Authority to chair a working group on the issue. Reuters said it is also playing an active role in providing a solution to the problem.