Following my previous post on Spain I received the following email from Bernardo Mariano at ERDesk which I reproduce here with his permission:
I saw your article on Spain “Spain – your gateway to Latin America? – 8 October 2010” where you commented “Spain is a unique outlier in the global fragmentation ‘experiment’. Despite being part of Europe and subject to the MiFID best execution requirements introduced in November 2007, alternative venues have found it almost impossible to establish a foothold there.”
Spain has been immune to fragmentation given Iberclear’s settlement requirements – ie, to transfer ownership of stocks, Iberclear, needs an id number, which can only be generated from a trade on the exchange’s paltform (SIBE).
Chi-X and Turquoise tried to circumvent this requirement by aggregating trades and sending them to a local broker, which then execute them in the SIBE’s closing auction, but participants have been reluctant to change the existing settlement process(1)
BME’s position is very vulnerable to competition – 62% of its revenues come from equity trading and equity clearing & settlement . . .
Its fees are over 10x higher than ChiX’s
And 72% of its turnover is concentrated in five stocks traded across Europe