BATS Europe, the multilateral trading facility (MTF) owned by US-based exchange group BATS Global Markets, has set a date for the launch of its dark pool, and revealed that it will use a maker-taker pricing model.
BATS claims the dark pool is the first in Europe to employ this tariff structure, which pays a rebate to those posting liquidity on the platform and charges a fee for those removing it.
The new non-displayed trading venue will launch on 7 August, subject to regulatory approval from UK regulator, the Financial Services Authority, with participant testing scheduled to start on 20 July.
Participants who add liquidity to the pool will be rebated 0.1 basis points, while those who remove liquidity will be charged 0.25 bps.
Orders will be executed at the mid-point of the best bid or offer available on the primary market of a stock’s listing. The use of an external reference price is one of four methods dark pools can employ to waive MiFID’s pre-trade disclosure requirements and keep orders hidden.
The dark pool, which will operate separately from BATS Europe’s integrated order book, will also enable its users to set a minimum execution quantity for their orders.
“We are pleased with the progress of BATS Europe’s unique dark pool offering and look forward to going live in August,” said BATS Europe CEO Mark Hemsley in a statement. “Participants will be able to receive rebates on posted liquidity and enjoy low rates for removing liquidity, consistent with our approach of offering first class markets with aggressive fee structures.”
While several other MTFs offer similar mid-point dark books, they typically levy a fee for both passive and aggressive orders. Chi-X Europe’s Chi-Delta dark pool charges 0.3 bps per order (although this charge is waived until 31 August), Nasdaq OMX Europe’s NEURO Dark charges 0.10 bps and Turquoise charges 0.50 bps for all dark orders.