The Department Store Versus the One Product Wonder?


In many respects the market share drop in LSE’s usual markets is alarming. At the same time, the beneficial impacts of MiFiD are actually being enjoyed by all exchanges – even those losing market share! However, the key problem for LSE remains its rather narrow product range, never minding its ongoing high cost basis compared to arriviste rivals.


In the stock exchange marketplace, the LSE functioned as a “cn” long before anybody apended “ecn” and came up with a buzzword that has now been melded for the current decade of rebranding into “MTF.”

Whatever you call them, the business of MiFiD has been a great boon to stock market competition. However, the key issue is not so much the competition aspect but actually the quality of the liquidity – truly the great triumph of MiFiD so far. In slumps gone by (which even in Britain with its seeming death wish on economic governance outside the Thacther/Major administration, this one strikes me as being rather ugly), by this stage in a bear phase, the liquidity had disappeared and the volume evaporated. In many respects the remarkable issue here is not that the LSE is doing lower volume and less as a share of the entire pie but rather that it is doing any significant volume at all!

Chi-X has stolen a march and the likes of Turquoise et al have followed suit driven by low IT costs and often banking/intermediary versus exchange political considerations too.

The weakness at LSE remains that it has a relatively narrow product line despite the addition of the Borsa Italian and its much stronger derivatives position.

Nevertheless, the demise of the London Stock Exchange has been much discussed over several decades and it is all too easy to think the world’s largest and most cosmopolitan financial centre will suddenly see its stock exchange destroyed. True, there is the possibility I have frequently discussed in other writings that the London Stock Exchange might meet a painful demise while London alway retains a stock exchange within the Square Mile.

Right now LSE is in the process of finding a successor to Clara Furse as CEO. The smart money has laid off on the insiders it seems (so far at least) and it is remarkable to see the folk who think they are frontrunners, as they may yet emerge from left field to vanquish (or at least engage in battle) the very platforms they have sought to develop to slay the LSE dragon in the first place.

In an era of uber-competition, this marks a further acceleration of the ultimate phase of the “Capital Market Revolution!” which was christened “The Reign of Terror” as befits an era when every single vestige of exchange competition is open to rivals.


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