Traders disagree over whether MiFID II has been successful, according to new research by SIX. A combined
70% of surveyed traders of the Swiss exchange believe that trading has
become more transparent - a key goal of MiFID II.
Paradoxically, only 26% believe that dark liquidity will shift to lit markets,
highlighting the failure of a key aspect of the regulation. Traders indicate that they are also divided as to
where dark liquidity on capped stocks will shift instead of lit markets, with a relatively even spread between
block trading/LIS dark pools (31%), Systematic Internalisers
(23%) and periodic auctions (20%).
According to Tony Shaw, Director London Office, Securities & Exchanges, SIX, "This variance in
responses highlights the reigning uncertainty among traders. Over time, market developments will provide more
conclusive answers on the success of MiFID II."
Reporting remains a concern
Reporting preoccupies the vast majority of traders as 86% of the respondents
cited transaction reporting (50%) and best execution reporting
(36%) as causing the most concern under MiFID II.
Although MiFID II and regulation remain a concern, it is no longer the single biggest challenge facing traders,
with the picture now far more mixed. Those citing regulation such as MiFID II as the biggest risk in 2018 fell
to 46%, compared with 73% in 2017.
Volatility here to stay?
The research also revealed that an overwhelming 87% of traders believe that the
increased levels of volatility we saw in Q1 2018 is a trend that will continue. Interestingly, three quarters of
traders stated that ETFs have contributed to this rise in volatility.
Commenting on the findings of the survey, Shaw added: "Despite the optimism of some traders, there is no
consensus on whether MiFID II can be deemed a success. Our research demonstrates a large difference of opinion
among market participants."
The survey also highlighted that traders are much more positive about growth prospects for their own industry, with
nearly two-thirds (62%) expecting more growth within their companies in the future,
compared to a mere 15% one year ago.
SIX has conducted a trader survey between 12 and 30 April 2018, with 174 respondents from across Europe, of which
53% traded in shares, 19% in Fixed Income,
14% in Structured products and 13% in ETFs/ETPs
or other products. Previous surveys conducted in 2017 have focused on
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