Charlotte Alliot, Group Head of Derivatives awarded in the 'Excellence in Trading Derivatives' category at the Markets Media's European Women in Finance awards.



In these interviews, she notably shares her views on the impact of diversity within the financial industry and what can be done to further support it.

Read the interview

How market quality has evolved since the migration of Borsa Italiana equity markets onto Euronext Optiq^®

After publishing studies on (#1) the evolution of market quality during Covid volatility peaks and (#2) metrics on the resilience of equities during the Ukraine-Russia geopolitical crisis, the Euronext Equities Team now provides (#3) an analysis of Milan equity markets, highlighting the market quality impact of the successful migration onto the Euronext Optiq® platform.

Executive summary

• Euronext is the venue for price formation for Milan stocks, as it sets and improves the EBBO prices over 74% of the time, and captures 80.5% share of Lit trading.
• There is healthy competition across other metrics such as Spread, Liquidity at Touch, Time Presence at EBBO. Since the migration of Borsa Italiana equity markets onto Optiq®, all such KPIs have improved for Euronext Milan, leading to 80.5% share of Lit trading.
• This outcome is thanks to the adoption of Euronext’s Supplemental Liquidity Provision scheme by market makers in Italy, the ramp up of activity in Milan by global banks, and the crucial role of local brokers and the retail community.

Methodology

• Scope: market quality metrics and volumes are analysed for FTSE MIB constituents, which are the most traded securities of Milan equity markets.
• Date range: from 3 January to 22 September 2023, with a focus on the evolution of key metrics since the migration of Borsa Italiana equity markets onto Euronext Optiq®, which was completed on 27 March 2023.
• Data source: BMLL Technologies – Vantage dashboard.
• Key metrics: EBBO Setting, Spread, Liquidity at Touch, Time Presence at EBBO, Lit Market Share of Trading. Weekly or Monthly data.
• Trading venues: Euronext Milan, Cboe Europe, Aquis Europe, Turquoise Europe.
• Equiduct market quality metrics are not accounted for because they are not available on BMLL Vantage dashboard and only Central Limit Order Book volumes are taken into consideration. Note that a comparison between Euronext Milan and Equiduct APEX was presented in March 2023.

Download Equity trading ‘Made in Italy’: From migration to price formation

Borsa Italiana Fixed Income, Warrants and Certificates markets opened for trading on the Euronext Optiq^® trading platform for the first time last week. The second phase of the migration plan of Borsa Italiana markets to Optiq saw over 32,500 instruments switch to Euronext’s proprietary trading technology, just six months after Borsa Italiana’s Equities and ETFs migrated in phase one. Derivatives will follow in 2024.

Opening up the markets to a new set of Italian instruments

When Euronext’s Fixed Income, Warrants and Certificates markets opened for trading on Monday 11 September 2023, the range of instruments on offer had expanded, with over 32,500 Italian fixed income, warrants and certificates now available for trading on the Optiq trading platform. This marks a major milestone in the journey to integrating all Borsa Italiana markets into the Euronext Optiq^® platform, as the Italian cash markets are all now live, and another key step in building the backbone of the Capital Markets Union in Europe.

Bonds, certificates and warrants

This phase of the migration brought across Borsa Italiana’s three fixed income markets: MOT, the regulated market designed to facilitate access to the bond market for private investors; Euronext Access Milan (formerly ExtraMOT), a multilateral trading facility (MTF) for professional investors that offers trading in bonds listed in other EU markets as well as Italian bonds, particularly those issued by SMEs; and EuroTLX, another MTF targeted specifically to non-professional and professional investors trading in retail-size fixed income securities.

Also included in the scope was the Borsa Italiana SeDeX market, for retail investors trading certificates and covered warrants, collectively known as securitised derivatives products (hence the name SeDeX). The Italian secondary market is one of the most active in Europe for these financial instruments.

Enhancing the markets for Italy and across Europe

Migrating the Borsa Italiana markets onto one platform gives investors in Italy the opportunity to trade a much wider range of products, while issuers of financial instruments gain access to a broad investor base across Europe and internationally, through all seven Euronext marketplaces. Likewise, European investors can benefit from trading Italian products through the Euronext platform.

The Optiq technology offers improved connectivity and backward/forward compatible protocols, and an optimised messaging model, and it has been adapted to bring in the best features that were in place for former users of Borsa Italiana, meaning enhanced markets for all users.

European and international trading clients also benefit from using only one platform for several markets, as the harmonised design and architecture simplifies their development needs. They have access to the largest liquidity pool in Europe, with a single entry point.

Existing members can extend their membership to a new Euronext market through a simple process.

What’s next?

This successful migration means that two of the three phases in the major Borsa Italiana markets migration to Optiq plan are complete, and the cash markets in all seven Euronext countries are now integrated on the same trading platform. The third phase will see the migration of derivatives instruments, and is targeted for the first quarter of 2024.

Meanwhile, work continues on the other major migration on Euronext’s books, this time in the post-trade sphere. Currently the clearing house for Italy (formerly CC&G), Euronext Clearing will become Euronext’s CCP of choice for its cash equity markets in November this year. Derivatives will follow, migrating from LCH SA to Euronext Clearing by Q3 2024, resulting in a harmonised clearing framework across Euronext venues.