The impact of MiFID on retail investors

Agenda

• Impact of MiFID on the retail investors, Guillaume Prache,

Managing Director of EuroInvestors

• Conclusions of the study conducted by Equiduct, Peter

Randall, CEO of Equiduct Systems Limited

• Q&A

Access to Real Time Data

Example

• Stock name: Societe Generale• Time and Date of the Screenshot : January 13th – 13:49:14.915 (CET)• Below: order book available on an online broker’s website

Example

• Stock name: Societe Generale• Time and Date of the Screenshot : January 13th – 13:49:14.915 (CET)• Below: view of the Home Market order book

Example

• View of the consolidated order book

A broker online connected to the Home Market would have missed the Best European Offer Price available at that exact time on BATS.

Cost of Opportunity

Example 1: AGEAS

• Number of venues where the stock is tradable during continuous : 5

• % of executed value missing the best price on another venue: 8.9%

• % of trades missing the best price on another venue: 8.6%

• % of trades executed on the home market missing the best price on another venue: 9.2%

• Total Value Improvement for January 13th : 1,788 €

• Average Price Improvement for trades missing the best price: 2.9 € - 7.5 Bps per trade

• Average Price Improvement for trades executed on the HM missing the best price: 3.2 € - 7.6 Bps

Example 2: ENI

• Number of venues where the stock is tradable during continuous : 6

• % of executed value missing the best price on another venue: 10.04%

• % of trades missing the best price on another venue: 10.2%

• % of trades executed on the home market missing the best price on another venue: 16.3%

• Total Value Improvement for January 13th : 12,895 €

• Average Price Improvement for trades missing the best price: 4.4 € - 3.5 Bps per trade

• Average Price Improvement for trades executed on the HM missing the best price: 4.3 € - 3.2 Bps

Example 3: SIEMENS

• Number of venues where the stock is tradable during continuous : 6

• % of executed value missing the best price on another venue: 16.1%

• % of trades missing the best price on another venue: 15.9%

• % of trades executed on the home market missing the best price on another venue: 14.1%

• Total Value Improvement for January 13th : 7,329 €

• Average Price Improvement for trades missing the best price: 1.8 € - 2 Bps per trade

• Average Price Improvement for trades executed on the HM missing the best price: 1.9 € - 1.1 Bps

Example 4: SOCIETE GENERALE

• Number of venues where the stock is tradable during continuous : 5

• % of executed value missing the best price on another venue: 15.8%

• % of trades missing the best price on another venue: 16.5%

• % of trades executed on the home market missing the best price on another venue: 19.3%

• Total Value Improvement for January 13th : 16,770 €

• Average Price Improvement for trades missing the best price: 1.8 € - 2.5 Bps per trade

• Average Price Improvement for trades executed on the HM missing the best price: 1.9 € - 2.7 Bps

Conclusions

• Brokers only displaying information from the Home Market would miss between 20-40% of the liquidity available on other venues

• It results in a cost of opportunity to the investors who have no access to it

• Between 10-20% of the trades executed on the Home Markets could have achieved a better price on another venue

• The cost of opportunity in 2010 for trades on the most liquid stocks missing the best price = 136M€

• It is supported mostly by retail investors because retail brokers are mainly only connected to Home Markets

MiFID has introduced competition to the equity market but the benefit of that competition are not available to the retail investors

214 7 4 2 5 32

135 197

713

1,087

745

1,087

505

7 7 7 9 21 18 6180

110

107

273511

1,489

1,518

0

500

1,000

1,500

2,000

2,500

3,000

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11*

Evolution of Traded Value on Equiduct Millions EUR

HB Traded Value PX Traded Value*Month to date

53 59

615

3,435

4,600

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011*

Mill

ions

Quarterly Traded Value

*to date