XTX Markets overtakes Citadel Securities and Tower Research as largest ELP SI in Europe

Research from TABB Group found that XTX Markets is now the largest ELP SI in Europe, following record activity across the landscape in October.

Systematic internalisers operated by electronic liquidity providers (ELP SIs) in Europe saw record activity October, with XTX Markets taking the top spot as the largest venue.

According to research from TABB Group, which tracks activity of six ELP SIs, notional volume of European ELP SIs reached a record €1.5 billion during the month, beating the previous record set earlier in the year.

“We are now the No.1 systematic internaliser in Europe by volume,” XTX Markets said in a post on social media acknowledging the development. “This demonstrates the effectiveness of our pricing and risk holding/low market impact approach to liquidity provision. Aligned with our top 3 status on many equity exchanges globally – it has been a successful year of growth for us in equities.”

The overall record was driven by a surge in volumes from XTX Markets, which overtook Citadel Securities and Tower Research Capital to become the largest European ELP SI in October. TABB Group’s research stated that XTX Markets saw 28% of ELP SI market share in European equities over the month, with Citadel Securities at 24% and Tower Research at 23%. Other ELP SIs tracked include Hudson River Trading, Jane Street and Virtu Financial.

“This definitely is an area to keep an eye on, particularly as regulators begin reviewing MiFID II’s impacts after two years and potentially tweak the rulebook. We think volumes on ELP SIs are likely to grow despite any regulatory changes coming their way,” said Tim Cave, analyst at TABB Group and author of the report.

Speaking at TradeTech in April, market participants largely agreed that the emergence of ELP SIs under MiFID II has caused a significant shift in market structure for the better in terms of access to liquidity. Although, concerns linger about the transparency of the venues and how the mechanisms are different from each other.

“All of the ELP SIs are genuinely different; some focus on market impact or size, some focus on specific parts of the stock universe. It’s really down to the broker to understand each SI’s characteristics and use the right liquidity provider and match them with the right end user, to really curate that liquidity pool,” said Jigar Patel, global head of business development at XTX Markets, during the conference.

This week, the chair of the EU financial watchdog confirmed that the regulator will take a ‘staggered approach’ to a review of MiFID II. Steven Maijoor said during a keynote speech that in the coming months the industry can expect several key consultations and review reports, specifically on the MiFID II transparency regime, including the double volume cap, derivatives trading obligation and SI regime.