Pan European multilateral trading facility (MTF) Chi-X Europe has sweetened its new Spanish offering with a price promotion that increases pressure on the incumbent exchange to respond to competition.
The MTF will increase the rebate paid on passive executions from October to December 2011.
The three-month promotion will apply to trading, clearing and settlement costs and the rebate will increase from 0.20 basis points to 0.30 basis points for executions in Banco Santander, BBVA, Iberdrola, Inditex, Repsol, and Telefonica securities.
Settlement fees will be refunded for customers trading more than €200 million per calendar month on any settlements in the qualifying securities, up to a maximum of two settlements per qualifying security per day.
Gross CCP clearing fees will also be refunded on any trades in excess of €200 million.
The offer excludes self-trades.
The announcement follows the highest trading volumes on the Spanish stock exchange in the last four years, driven largely by concerns in the government debt markets. According to Bolsas y Mercados Espanoles (BME), holding company for the national exchange, August trading volume reached €70.79 billion, up 32% year-on-year. Equity trades for the month climbed to 4.4m, up 82%.
The BME usually claims around 99% of total volume, but in the week ending August 26, Chi-X Europe hit 4% of equities trading volume in Spain.
Clearing and settlement have been major barriers to trading venue competition in Spain, while other major European equity markets have seen widespread fragmentation.
Regulatory reform in the form of new laws – Title V and Title VI (due early 2012) – is designed to make clearing and settlement easier for MTFs and other potential players. Similar to other MTFs, Chi-X Europe has taken advantage of Title V to access the Spanish settlement system via pan-European CCP EMCF since May.
Chi-X Europe accounted for 18.3% of Europe's equity trading in August and expects to achieve double-digit market share in Spain in a “reasonably short period of time”.