EU stock trading plans are creating a huge amount of debate among market players and Euronext CEO Stéphane Boujnah is adamant that this action risks hurting the small investors. He is concerned that the proposed creation of a central stock market database with real-time trading across Europe would create a world of opportunity for larger firms with more resources, while leaving smaller investors unable to access the best prices.
Boujnah explains, “Real time means being [ . . .] a victim of arbitrage…We are sceptical of the benefit of a pre-trade consolidated tape.” Clashing against those advocating the proposed tape, Boujnah believes that the retail investors would have difficulty in accessing all the trading venues available to institutions such as hedge funds and fast computer-driven traders.
European Commission is taking steps towards this action and is currently conducting a review for potential changes. Exchange operators, brokers and asset managers have been lobbying for the proposal for months. This proposition involves introducing a consolidated tape that captures the live stock and bond price data. A pre-trade consolidated tape would show real time price information, while post-trade captures completed transactions.
Eurofi, a think-tank from Paris, has stated that the creation of a real-time consolidated tape would be more advantageous to the high-frequency traders than the retail investors. In response, Boujnah suggested a “real-time post trade [tape] supplemented with a snapshot of pre trades” instead of continuous real-time pre-trade price information.
In addition to this, Boujnah has also called for strict regulation on ‘systematic internalisers’, investment firms based off-exchange, that he suggests “like a type of Uber that are allowed not to abide by the driving code”. He further suggested a ban on pay for order flow, stating it as a controversial trading practice used by retail brokers.
Euronext is a Pan-European exchange service provider and the largest exchange operator in Europe. It offers solutions for capital markets, including trading, clearing, post-trade and listing. Some of the markets where Euronext operates include Amsterdam, Brussels, Lisbon and Dublin. It has agreed to collaborate with 14 exchanges to provide an equities tape across the EU.
Stéphane Boujnah is the Chief Executive Officer of Euronext. He was appointed as the CEO in 2018, having worked at the company since 2002. His career spans nearly 30 years in the capital markets, and he is well-known for his advocacy of financial market policies and regulations. He is actively looking forward to the discussion and regulation that the EU Mifir holds and the decision they will make.