Analysis: LSE gets a shrinking feeling as new kids pile on the pressure

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Not any more.

Not only is it coming under pressure to attract flotations from the likes of other major markets, such as Wall Street, Nasdaq, Hong Kong, Frankfurt and Paris, but even those trading platforms in its own backyard are scrambling for market share.

In recent years the emergence of multiple trading platforms such as Chi-X, Nasdaq OMX and the technology driven American outfit BATS Global Markets have also begun eating into its market share. BATS is the newest kid on the block. Its single-trading platform was introduced to European markets barely a year ago, but has already established itself as a major player. Earlier this month, it announced it had achieved almost a 10% share of the London FTSE 100 market. Traders say they expect BATS to become a major player in London during the next few years.

Chi-X has also been making big inroads, which is why the LSE now accounts for less than 50% of the total turnover now being carried out in BP, the UK's biggest blue-chip company in terms of capitalisation. The number of shares the LSE trades in another oil giant Royal Dutch Shell has also plummeted.

Even the junior Plus market is making in-roads. Last week it reported that equity trading volume of more than 11 billion shares had been achieved for the first time in October, just shy of 10% of the total UK equity volume being traded on various exchanges and platforms. The growth has been driven by strong retail trading and reflects Plus's ability to trade all UK equities now, including all AIM stocks since earlier this summer.

In the meantime, the LSE has delayed the introduction of its nascent dark pool Baikal, pending the outcome of takeover talks with Turquoise, a rival multiple trading platform.