As much as 22 per cent of total European equity volume is now executed through alternative trading systems, most of which are registered as multilateral trading facilities.

The data from research consultancies Tabb Group and Aite Group is contained in a white paper by ITG titled “Alternative Trading Systems in Europe: Trading Performance by European Venues Post-MiFID”. 

The Markets in Financial Instruments Directive is credited with breaking down the market power traditionally held by national exchanges.

By analysing a sample of trading activity in Europe (5.6 million trades), ITG has determined that alternative trading markets, and dark pools in particular, add value relative to primary markets by lower trading transaction costs. 

On average, costs in the primary markets are 71 per cent higher than those observed in dark pools and 20 per cent higher than in displayed multilateral trading facilities. Cost savings are most pronounced when trading small-cap and mid-cap stocks

The risk of slippage - a difference between estimated transaction costs and the costs actually paid - is greatest in primary markets, and dark venues perform better in this respect than the displayed alternative markets.

The benefits of higher participation rates in dark pools increase with the relative size of an order.