Translated material
Seven bankers
Global investment banks compete with the London Stock Exchange
Leading European exchanges will soon have a powerful competitor. Seven of the largest Western investment banks - Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS - plan to create a pan-European stock market trading platform next year. This will allow market participants to reduce costs for transactions with securities. Russian investment companies, unfortunately, have nothing to be happy about: they mainly conduct their operations in their homeland, and global investment banks are not yet going to compete with the MICEX and RTS.The banks said in a statement that to create a trading platform they will form a new company with independent management, Project European MTF (Multilateral Trading Facility). Banks will become its shareholders, will finance the new company, help recruit employees and form its infrastructure. It is expected that the site will begin operating in 2008.
When creating a new trading platform, the European Union Directive “On Markets in Financial Instruments” (MiFID) will be taken into account - a new European regulation that should come into force in November next year. With this document, the European Union hopes to create a pan-European financial services market that will allow participants to minimize costs and become more transparent. “We meet MiFID requirements by creating an integrated pan-European trading platform where shares can be traded more cost-effectively with significant liquidity,” the investment banks said in a statement. The basis for the trading platform has already been created and a number of meetings have been held with EU antimonopoly authorities.
As you know, these seven banks account for almost half of the transactions in shares on European stock exchanges. They are also leading players in the OTC market. As stated in the message, not only the founding company, but also any investment bank will be able to trade on the new platform. Trading will take place on almost all securities listed on European exchanges. So it seems that the world's largest banks will finally fulfill their promise to compete with the London Stock Exchange (LSE), Euronext, as well as other local European platforms. Western analysts note that the emergence of a powerful competitor will force other exchanges to significantly reduce the cost of their services for clients. Their Russian colleagues share a similar opinion.
“If banks have taken up this business, it means their clients need it, therefore, the new trading platform will be in demand,” believes Alexander Razuvaev, head of the analytical department of FC Megatrustoil. “The innovation will only benefit ordinary international investors,” says Konstantin Bazarkin, head of the treasury products sales department of the Bank of Moscow. -- The emergence of new sites and competition in this sector will lead to lower costs and increased liquidity. However, this event will indirectly affect domestic investors.” After all, Russian investment banks represent the interests of their Western clients, as a rule, only in Russia, and for Europe, Asia and the USA, investors use completely different companies. Therefore, the volume of operations carried out by Russian investment banks abroad is very small.