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Competition for order flow is widely documented for U.S. markets, but is a relatively new phenomenon in European equities trading. Only with the Markets in Financial Instruments Directive, which went into effect in November 2007, did new trading venues emerge in Europe that for the first time ever seriously threatened established exchanges. Chi-X, one of the new competitors, has gained a considerable market share, eroding the traditional exchanges' share of equities trading volumes. As the proliferation of new trading venues in Europe increases the danger of market fragmentation, this paper analyzes the potentially positive liquidity implications of a new trading venue. To this end, we examine the impact of the Chi-X market entry in French blue-chip equities on the liquidity of their home market. Our findings suggest that in consequence of the new competitor's market entry, liquidity in the most actively traded stocks was enhanced on the home market during the observation period. This improvement exceeds the general European liquidity trend measured by a matching firm approach, which implies that despite fragmentation of order flow, market quality may even be enhanced.

The Balanced Scorecard (BSC) is a well-established framework for the management of a company as it integrates financial and non-financial perspectives. Little attention has been given to its theoretical and conceptual valuation. We illustrate how the stakeholder value theory corresponds with the concept of the BSC and show the importance of underlying cause-and-effect relationships between its perspectives. For the case of clearing in Europe which is currently facing profound changes, we present our three-phased approach how to adjust and to extend Kaplan and Norton's original concept. We modify the generic BSC by adding risk management as a separate perspective and by integrating competition and IT. Based on multiple case studies, we then validate whether the modified BSC is suited to meet the specifics of the clearing industry.

The European post-trading landscape is recently changing fundamentally due to regulatory actions, the financial crisis, and the strong linkage of the global financial markets. The systemic importance of post-trading infrastructures underlines the industry's significant dependence on safe and efficient processes and thus the importance of reliable IT-systems. Using the Delphi methodology in a study among a multitude of experts from different areas of post-trading, we developed a joint and coherent view of the most important issues relating to IT the post-trading system has to cope with. Keywords

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