Abstract
The Markets in Financial Instruments Directive (MiFID) could be the foundation of new trading platforms in Europe. This contribution employs insights from the theoretical and empirical literature to highlight some of the possible implications of MiFID. In particular, we argue that more competition will lead to more liquid markets, reflected in lower bid–ask spreads and greater depth. It will also lead to innovation in incumbent markets and stimulate the design of new trading platforms. MiFID has already introduced more competition, as evidenced by the startup of Instinet Chi-X, the announcement of new initiatives, including Project Turquoise and BATS, and the reactions of incumbent exchanges.
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This is an updated version of my inaugural lecture written for the occasion of my acceptance of the TILEC-AFM Chair on Financial Market Regulation at the University of Tilburg.
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Degryse, H. Competition between financial markets in Europe: what can be expected from MiFID?. Financ Mark Portf Manag 23, 93–103 (2009). https://doi.org/10.1007/s11408-008-0095-5
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DOI: https://doi.org/10.1007/s11408-008-0095-5