Pan-European multilateral trading facilities Chi-X and Turquoise have revealed plans to start operating in Spain. Chi-X will start trading in the country on 15 December, while Turquoise will make its debut next year. “We will be rolling out our Spanish stocks in mid-February,” Eli Lederman, Turquoise’s CEO, told theTRADEnews.com.
Neither BATS Europe nor Nasdaq OMX Europe have finalised their plans for the Spanish market yet, but are looking to launch there soon.
The MTFs’ forays into the Spanish market have been complicated by the country’s settlement requirements. To transfer ownership of stocks, the Spanish central securities depository, IBERCLEAR, needs an identification number, which can only be generated from a trade on the primary exchange.
Turquoise will circumvent this by aggregating all of its Spanish trades and sending them to a local broker, which will then execute them in the closing auction of the primary exchange. “This will require some operational changes for our members,” said Duncan Higgins, head of client relationship management at Turquoise. “They will need a process for settling trades done on Turquoise and a process for those done on the exchange itself.”
He added that Turquoise could have started operating in Spain earlier, but wanted to allow members time to prepare for the settlement process changes.
Chi-X will start trading only one stock – Telefonica – in December and will then add five more constituents of Spain’s IBEX 35 index on 15 January 2009. This staggered approach is designed to allow participants time to adapt to the additional settlement and registration requirements. It will then roll out the remaining IBEX 35 stocks on 22 January.
Chi-X’s Spanish market segment will initially close at 15:30 UK time to allow for downstream processing. This time will be reviewed after launch.
Higgins said Turquoise’s launch in Spain would follow the same rollout procedure as other markets. “We will start with five stocks, and then add the rest of the index stocks to the integrated market and mid-cap stocks for trading in the dark market,” he said.