Aquis Exchange, a pan-European multilateral trading facility (MTF) led by former Chi-X Europe CEO Alasdair Haynes has unveiled details of its subscription-based pricing model, eschewing the popular maker-taker pricing model.
The MTF is currently seeking approval from the Financial Services Authority and has also announced the appointment of Niki Beattie, managing director at consultancy Market Structure Partners, as its independent non-executive chairman.
Aquis, which is aiming to launch in the middle of this year, will attempt to break what it perceives to be a duopoly in European equity trading. In the majority of European markets, trading is dominated by a combination of the domestic exchange and BATS Chi-X Europe, the dual multilateral trading facility that accounted for over 22% of European market share in February, according to data from Thomson Reuters Equity Market Share Reporter.
“There is room for more competition in the equity trading space,” Beattie told theTRADEnews.com. “A lot of market participants have sophisticated smart order routing technology that favours venues displaying the best price, while the pricing model will attract both bulge-bracket and smaller-sized brokers.”
One of the ways Aquis will try to do this is through a pricing model that does not discriminate between passive and aggressive liquidity through a maker-taker fee structure. The maker-taker model is popular among pan-European MTFs, including BATS Chi-X Europe and London Stock Exchange-owned Turquoise, but regulators could outlaw the pricing model as part of new equity trading rules contained in MiFID II.
Aquis will instead use a subscription based model that charges members a flat fee, regardless of the amount of trades conducted. The venue will offer three tiers targeted at: large brokers and investment banks that trade frequently; lower volume users; and market makers.
“Regulation is threatening the maker-taker model, so the market needs to devise a way to encourage trading without favouring certain types of participants,” said Beattie. “Brokers also want to know how much it costs for them to do their business. Aquis will offer a very cheap way of doing business and brokers will not have to worry about the incremental costs they are incurring.”
Prior to setting up Market Structure Partners, Beattie worked at Merrill Lynch as head of the firm’s market structure group in EMEA, during which time she also spearheaded the creation of trade reporting system Markit BOAT and was also a founder of Turquoise MTF. Beattie also serves on the board of agency broker CA Cheuvreux and on the supervisory board of Moscow Exchange.
Meantime, Sweden-based technology provider Neonet has confirmed that Haynes has joined its board of directors. Neonet, which is owned by Hay Tor Capital and KAS Bank, is seeking to reestablish its London presence and will draw on Haynes’ expertise to further its strategic ambitions.