Interesting day yesterday in the ever-changing world of fragmentation. During the MTF v Traditional Exchanges debate at TradeTech Liquidity it seemed like there were two strategies emerging. The big primary markets are trying to leverage their distribution and multi-asset capabilities whilst the smaller, more nimble, MTFs are looking to focus around specific areas of the European equities market. The big boys also cast doubt over the viability of EMCF (owned by Fortis) which acts as clearer to most of the MTFs. In these more risk averse times it looks like they might have a point as the Chi-X volume did fall away when Fortis took its own turn through the credit crunch mangle a few weeks back. I guess what it will come down to is the market deciding upon the right balance between lower and lower costs and the quality/risk associated with clearing and settling the resultant trades.

Despite this, the number of alternative venues lining up to launch next year continues to grow and each one has its view on how to reach critical mass. Reading between the lines it looks like the interaction between dark and lit liquidity is going to be a key differentiator next year.

Thanks to everyone who came up to me at the show yesterday to comment on the FFI. It’s great that so many of you think that it’s a useful tool. Of the suggestions for the next version it looks like we have a number of themes: clarifying how best to cover Euronext submarkets (The Great Dexia Debate); extending the coverage to the FTSE250; inclusion of an analysis of OTC/dark pool trading or making it real time so it can be incorporated directly into trading strategies. I’ll see what the boys at Fidessa Labs think and let everyone know.

Finally, it seems like we have spawned a new craze with the Fidesssa Making Sense of Fragmentation puzzle. Apparently it’s not just about solving it or how quickly you solve it, but how many different ways you can solve it – probably a fair reflection of the industry it represents.