Record quarter for Plus as LSE faces threat from alternatives

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The London Stock Exchange is facing increasing pressure from rival trading venues, as its share of UK trading has fallen by as much as a third since the European Union enacted its Mifid legislation at the end of 2007.

Showing how smaller rivals are benefiting from Mifid, Plus Markets, run by the former head of LSE's growth market, yesterday reported a record number of share transactions in the first quarter.

Plus has grown from a fraction of the LSE's UK equity trading volume with just 6.2 billion shares traded at the start of 2007 to 16.5 billion in the first three months of this year.

While Plus has barely registered on the LSE's radar in the past, and its challenge is still taken lightly by insiders, the incumbent exchange is being forced to react.

Rivals, including Chi-X, Turquoise and BATS Europe have all launched alternate venues in the past two years, and bit by bit have lifted their market share.

The data provider Thomson Reuters reported that for February, the London Stock Exchange saw 39.8 billion shares traded, while the four rivals now have about 12.4 billion. The LSE had more than 90 per cent of trades in UK equities before Mifid was introduced, according to Thomson Reuters. Now it stands at about 58 per cent.

Mifid, the Markets in Financial Instruments Directive, required brokers to look at alternative venues to achieve the best trading price for their customers.

This is coupled with the LSE's disappointment over Baikal, a trading platform that the exchange was preparing to launch with Lehman Brothers when the US bank collapsed.