There is a need for a new market structure whereby institutions trade alongside the retail markets operated by exchanges to create a safe and efficient marketplace for all market constituents, according to Liquidnet.
The best way to combat competition and attract global investment markets was to create an efficient institutional market, Liquidnet chief executive Seth Merrin told delegates at the annual World Exchange Congress in Madrid this week.
Merrin said by looking beyond mergers and acquisitions, securities exchanges could return to their roots as trading venues that best served individuals, listed companies and the broader market.
"We have seen across the world that a single execution venue cannot efficiently handle all the competing interests in today's marketplace. In creating a whole new market structure, there are two important considerations," he said.
"The first is to acknowledge the scale and size of the institutional market and the need for them to have a venue to trade safely and efficiently in the size that they need away from the retail market.
"The second is to recognise and adapt to the global nature of both exchanges and investors today."
He also advised the world's exchanges to explore alternative options to remain competitive globally.
"Exchanges, long the centre of capital creation in their local markets, are well positioned to become the gateway to the rest of the world by creating borderless trading opportunities that benefit all participants," he said.
"Partnerships can open up these opportunities easily and efficiently, resulting in more investment and trading and ultimately more capital flow - a win for all parties involved."
