Financial Markets and Portfolio Management

, Volume 23, Issue 1, pp 93–103 | Cite as

Competition between financial markets in Europe: what can be expected from MiFID?

Open Access


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.


Financial regulation Market microstructure MiFID Trading systems 

JEL Classification



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Copyright information

© The Author(s) 2009

Authors and Affiliations

  1. 1.CentER-Tilburg University, TILEC, and European Banking CenterTilburgThe Netherlands

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