The Impact of Market Fragmentation on the Liquidity of European Stock Exchanges

MiFid has fostered competition between stock exchanges and alternative trading systems by removing the option for Eu Member States to impose that equities must be traded only on regulated markets (so-called concentration rule). The success of alternative trading venues is mainly due to the adoption of advanced technologies which attract more sophisticated investors. This paper empirically measures how market fragmentation is affecting the quality of blue chip’s trading on European Stock Exchanges and shows that competition among exchange platforms does not have a negative effect on the level of liquidity of primary regulated markets