Third Avenue Management's Michael Warlan has laid out the contrasts between US and European market structure, arguing in an interview with The TRADE that the two regions present buy-side desks with fundamentally different execution problems.

The starting point is fragmentation. Both the US and Europe operate fragmented equity markets, but the mechanics of that fragmentation differ, and those differences feed directly into routing decisions, broker selection and the cost of uncovering liquidity.

In the United States, trading in any listed name is dispersed across more than a dozen lit exchanges, a network of alternative trading systems, and the off-exchange venues that now account for a substantial share of consolidated volume. Regulation NMS, with its order protection rule and the national best bid and offer as the reference price, frames how displayed liquidity interacts. The result is a market where the buy-side trader's core task is deciding where and how to access liquidity without paying for speed and information leakage.

Europe, by Warlan's account, presents a different set of constraints. The MiFID II regime imposed its own transparency and reporting requirements, and the post-Brexit landscape added further complexity for firms trading across UK and EU venues. Dark pools, systematic internalisers and periodic auction mechanisms each carry distinct rules on when undisplayed liquidity can execute and at what size. For a US-based asset manager trading European names, that regulatory layer sits on top of the usual problems of time zones, currency and settlement.

The practical consequence, as Warlan frames it, is that execution workflows cannot simply be transplanted from one region to the other. Algorithms tuned for US microstructure — with its sub-penny competition, rebate-driven venue pricing and maker-taker economics — do not map cleanly onto European venue economics, where fee structures and tick regimes differ. Broker scoring, transaction cost analysis and venue-selection logic all need region-specific calibration.

That calibration question has grown more pressing for firms like Third Avenue as portfolio construction increasingly crosses borders. A desk that measures execution quality only against the benchmarks of its home market risks misreading the quality of its fills abroad — and misallocating the fixed costs of maintaining connectivity, smart order routing and compliance oversight across regions.

Warlan's perspective matters because it comes from the buy side rather than from a venue or vendor with a product to sell. When an exchange operator asserts that its new order type improves price discovery, or a dark pool operator claims better execution for large orders, those are assertions a desk can test against its own TCA. A portfolio manager's view of market structure is shaped instead by what the workflow actually requires: where liquidity appears, what it costs to reach, and which rules bind.

The interview also lands at a moment when both regions are revisiting parts of their rulebooks. European authorities continue to review aspects of the MiFID II framework, including transparency and consolidated tape provisions, while US regulators and operators debate market data access and off-exchange trading levels. Any change to those rules would alter the relative costs Warlan describes — which is precisely why desks on both sides of the Atlantic track these consultations not as compliance paperwork, but as forward-looking inputs to execution design.

Warlan's closing message to buy-side peers is that structural differences between the two markets are durable features, not transitional friction. Desks that build execution strategies acknowledging those differences — rather than assuming convergence — will be better positioned as both regions' rulebooks evolve.