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Nasdaq OMX and Burgundy make progress; LCH.Clearnet fights back

Great to see that volumes are on the rise at Nasdaq OMX. Whilst the total volumes are still quite small, the rate of increase is pretty impressive.
Nasdaq OMX Weekly Turnover €bn

Nasdaq OMX Weekly Turnover €bn

Nasdaq OMX Market Share per Index

Nasdaq OMX Market Share per Index

It seems that a combination of ultra low cost and focus around targeting specific user groups (in this case, traders of the CAC40), is paying off. As a result, the FFI of the CAC40 has risen by 8.5% in just a week. It’s probably too early to tell, but this does seem an endorsement of last week’s comment about how the European landscape might end up. Speaking with Charlotte Crosswell today she said that they were hoping to replicate this focussed approach on the DAX and that they were also seeing more order routed volume flowing through the platform too.

Also, congratulations to Burgundy on receiving FSA approval. It looks like the Nordic MTF will now begin operations in the summer. Olof Neiglick (Burgundy’s CEO) did make the point to me, however, that “SOR is new to the region” and so it will naturally take some time to build up liquidity on his platform.

In other news it appears that competition in the clearing and settlement world is hotting up (LCH.Clearnet cuts EquityClear fees). The rise of MTFs opened the door for lower cost clearers such as EMCF to step in with lower fees and it now looks like the primary CCPs are starting to fight back. The real debate, however, is about what the real shape of clearing should be. The challenge is to get the right balance between structure (horizontal or vertical), fees (utility or for profit) and, of course, risk management. Events over the past 12 months have shown that big financial institutions can disappear overnight and so the primary role of CCPs in terms of guaranteeing trades should not be overlooked.

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