Chi-X Europe, the pan-European multilateral trading facility (MTF) recently acquired by US market operator BATS Global Markets, has extended and improved its pricing promotion for Spanish stocks after failing to gain any significant market share since the scheme's initial introduction in October last year.
The promotion, which will now run until the end of March instead of its initial expiration at the end of December, consists of a rebate of 0.30 basis points paid on passive executions for securities in Banco Santander, Banco Bilbao Vizcaya Argentaria, Iberdrola, Industria de Diseño Textil, Repsol and Telefonica and includes trading, clearing and settlement costs.
Chi-X Europe will also increase the rebate paid on passive executions from 0.20 basis points to 0.30 basis points for executions in all IBEX35 securities from 1 February to 31 March. The IBEX35 comprises the top 35 most liquid Spanish stocks. Post-trade costs on the additional securities will remain unchanged.
Market participants trading in excess of €200 million per month in the six qualifying securities on Chi-X Europe will have their gross central counterparty (CCP) clearing fees refunded on any trades in excess of €200 million in these securities. Under a similar system, participants will also receive a refund of their settlement fees up to a maximum of two settlements per qualifying security, per day. The post-trade costs will be calculated by clearing house EMCF.
Competitive pressures are increasing in Spain, following changes to the country’s clearing and settlement regime in H1 2011. Previously, alternative venues trading in Spain were required to obtain an identification number from the domestic exchange Bolsas y Mercados Espanoles (BME) that would have to be sent to its central securities depository Iberclear in order for settlement to occur. However, under Title V reforms introduced last year, foreign CCPs can obtain the required identification number directly from Iberclear – cutting the obstacles competitors must face to establish themselves in the Spanish market.
Chi-X Europe accounted for 2.7% market share in Spain as of December 2011, while the BME headquartered in Madrid had 95.3%, according to figures provided by Thomson Reuters. In September 2011, the month before the price promotion started, Chi-X traded 1.99% of Spanish stocks. Chi-X Europe was acquired by BATS Global Markets in December 2011. But competition looks likely to intensify still further in the coming months, as Platforma Alternative de Valores Españoles (PAVE), a multilateral trading facility for Spanish stocks, plans to launch later this quarter.
PAVE delayed further
Meanwhile, Platforma Alternative de Valores Españoles (PAVE), a MTF for Spanish stocks, has pushed back its prospective launch date to this summer after struggling to obtain the financial backing it required for its intended Q1 2012 launch.
PAVE CEO Javier Tordable told theTRADEnews.com that he wants to secure a non-Spanish investor before going live.
“Spanish market participants want lower pricing, better customer service and all the benefits of competition,” he said. “The talks we have had so far have been encouraging, but the current economic climate is causing difficulties for a lot of firms that would otherwise be interested. We are looking for a partner with a long-term view and we want to ensure PAVE gets the support it needs. We will continue searching.”