Bolsas y Mercados Españoles (BME), the Spanish stock exchange operator, is beginning an extensive overhaul of its trading platform Sistema Interconexion Bursatil Español
(SIBE), which has been in use since 1995. The group, which comprises exchanges in Madrid, Valencia, Barcelona and Bilbao all operating from a single order book, has seen a growth in trading volumes and sees the overhaul as necessary to compete in the European market.
“Look at the London Stock Exchange,” says BME spokesman Pablo Malumbres, “They are upgrading their system. In Tokyo, they have launched Arrowhead. We want our system to be the best. We are competing with the other exchanges.”
The exchange’s volumes have declined since a turnover high of €1.6 trillion in 2007, but this is expected to change he says. He notes that high frequency trading firms are boosting trading volumes and that is reflected on the Spanish market. “We have already seen growth in trading volumes for the first half of 2010. We expect this growth to continue.”
The overhaul will based on the SMART system, used by the Spanish futures and options market, since 1990. The new SIBE platform, slated for release in Q4 2011, will bring trading in equities, ETFs, warrants, certificates and other products under the same umbrella. The upgrade is expected to cost up to €1 million.
In 2009 the BME claims that trades executed and orders placed were up 53% and 25% respectively from 2008. The system's equity market reported trading volume exceeding €900 billion in 2009.
“From 2009 we have seen a very important increase”, said Malumbres. “In 2009 the main index was up around 30%, so there was growth in investment and trading. On our exchange, we have the big, multinational blue chips like Telefonica, Santander, and so on. They are among the most liquid in Europe. Most of the investors came here to buy those stocks. 60% of the trading volume in Spain is from foreigners. It has always been a very international exchange.”
Spain has traditionally seen relatively little exchange competition, compared to its European neighbours. So far, complex rules and interpretations of the EU's MiFID directive have limited multilateral trading facilities involvement in the Spanish market. However, recent changes to Spain's settlement infrastructure are expected to increase the market share of alternative trading venues in the country.