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Fragmentation fever

A number of people have asked me about Markit’s launch of its fragmentation analysis (see http://www.finextra.com/fullstory.asp?id=19393). Reading this it seems that Markit has a different (although still valuable) objective from our own. To quote: “The service ranks brokers on each European trading venue, stock or index according to the volume and value of their trades”. If I have understood this correctly then it will show the market share that brokers have on different venues and indices which is completely different from measuring liquidity fragmentation across the actual venues themselves. Isn’t this basically the same as AutEx BlockDATA® whose website says it “is the most comprehensive tool available for gauging broker market share in global equity markets. AutEx BlockDATA® ranks brokers based on trading activity by volume or value traded in selected stocks, markets, or industries.”?

I guess fragmentation fever has resulted in some slight confusion about the different goals of our respective offerings. I can see how Markit’s service will help the buy-side better understand the venues that brokers are trading on but I don’t see how it helps the trading community “identify pools of liquidity” given that it ignores the venues themselves and only covers 60% of the traded volume. Still, I would certainly like to find out more – if anyone has a view then please let me know.

As we’ve stated before, our aim with this site (and the FFI) is to provide a universal, unbiased view of how liquidity is fragmenting between the primary and alternative exchanges. Having additional perspectives is a good thing as long as people understand what they are looking at.

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