BATS Europe, the pan-European multilateral trading facility (MTF) owned by US exchange BATS, is planning to launch a dark pool in August. Unlike rival pools, BATS Europe’s offering will use a maker-taker pricing model, although the MTF has not yet released specific price details.
BATS Europe participants will be able to send orders to the pool using existing FIX handlers. Orders will be executed at a mid-point reference price. BATS said the pool will include advanced order features, such as the ability to set a minimum execution quantity.
“We believe the costs for participants to send orders to other dark pools are unnecessarily high and offering dark pool access at aggressive fee levels is another example of BATS Europe leading the way forward in providing first-class execution at competitive prices,” said BATS Europe CEO Mark Hemsley in a statement. “We will reward participants that add liquidity to our dark pool via a rebate pricing structure since they create the opportunity for liquidity removers to benefit from price improvement.”
BATS Europe has become the latest European equity trading venue to offer a non-displayed mid-point matching function. German exchange Deutsche Börse launched Xetra MidPoint in November 2008, fellow bourse NYSE Euronext introduced SmartPool in February 2009, broker-backed MTF Turquoise launched its facility in April, and rival MTFs Chi-X Europe and Nasdaq OMX Europe followed suit in May with Chi-Delta and NEURO Dark respectively. The London Stock Exchange has a non-displayed MTF, Baikal, in the pipeline, and plans to launch the smart order routing segment this week. NEURO Dark and Baikal aim to differentiate themselves by routing orders to other venues.
Chi-Delta charges 0.30 basis points for execution, although fees will be waived until 31 August. Neuro Dark charges 0.10 basis points. Turquoise’s dark order fee is 0.50 basis points.
BATS Europe is currently reviewing the provision of the dark pool with UK financial regulator the Financial Services Authority. It expects the pool to be available for testing in July.