Euronext, the European stock exchange group planning a merger with the New York Stock Exchange (NYSE), says it is introducing a best execution algorithm, real-time dissemination of off-order book trades and new transaction reporting services as part of preparations for the implementation of the Markets in Financial Instruments Directive (MiFID) in November 2007.
The exchange says the new trading algorithm will deliver best price execution on buy and sell orders from its central orderbook, mitigating the need for members to become “systematic internalisers” under MiFID, and deal on their own account through alternative platforms.
Such orders may be settled directly by the originating member firm, says Euronext, eliminating the cost of clearing and settlement which can represent up to 40% of total transaction costs. The exchange is also developing a service of transaction cost analysis for member firms and investors, allowing them to verify best execution.
Other MiFID requirements for post-trade transparency will be met through The provision of a real-time publishing facility for members to disseminate data off-order book trades in European equities and ETFs listed on Euronext, and report them to regulators.
Euronext says order-processing and data-dissemination capacities on its platform more than doubled in 2006, cutting response times by over 50%. The exchange is migrating to Linux-IBM technology which it says will further accelerate the capacity, speed and flexibility of the system.