The Federation of European Securities Exchanges (FESE), a trade body for exchange operators, has launched a strategic review that opens to door to greater cooperation with multilateral trading facilities (MTFs).
The review, conducted by consultancy firm McKinsey & Company, aims to strengthen the organisation by ensuring it continues to be representative of the exchange industry.
Members and other stakeholders are being asked for their views on FESE’s effectiveness in representing exchanges on a European level and providing input to regulation. The trade body will also question market participants on the usefulness of the technical advice it provides and growing significance of MTFs, which may result in allowing them to become members.
Since MTFs began to proliferate in 2008, they have steadily grabbed market share from the domestic European venues represented by FESE. In September, the three largest MTFs – BATS Europe, Turquoise and Chi-X Europe – accounted for 30% of total European trading, with Chi-X Europe being the largest trading venue by turnover, according to figures from Thomson Reuters.
FESE has already worked with MTFs in areas including tick size harmonisation – a move that was widely seen as positive market-led initiative – and is currently engaged in a project to coordinate the flags used by trading venues to identify different types of transaction, which is seen as a crucial pre-cursor to establishing a consolidated source of post-trade data. MTFs also report data to FESE, which the trade body consolidates into a Europe-wide monthly report.
FESE represents 46 equities, bonds, derivatives and commodities exchanges. The London Stock Exchange withdrew its membership from FESE in 2009, just months after Xavier Rolet was appointed as the bourse’s CEO on 20 May.
FESE is not the only industry association to consider a reshuffle in response to changes in the European securities market landscape.
The Association for Financial Markets in Europe (AFME), which represents brokers, was formed November 2009 through the merger of the London Investment Banking Association and the European arm of the Securities Industry and Financial Markets Association. At the time, AFME said the merger was a response to regulatory environment for financial markets that was becoming increasingly globalised.