Equiduct Trading, a recognised investment exchange owned by Börse Berlin, has pushed back its launch because members are not yet ready to trade.
“We had aimed for February, but now we are saying Q1,” Artur Fischer, joint-CEO of Equiduct, told thetradenews.com. “We have been ready to trade since October but trading participants are not as prepared as we thought. Given the market circumstances, we are not surprised by this.”
NYSE Euronext blamed extreme market conditions for postponing the launch of its planned multilateral trading facility, NYSE Arca Europe, from November 2008 to this month, but Fischer says other aspects have played a role in delaying new venues.
“The market conditions and the subsequent cost cutting by brokers, as well as the price war between launched MTFs, have made it harder for us,” said Fischer. “But we were also surprised at the number of venues with proven track records that came into the market. As a result, it was a lot tougher for us to gain recognition at that time.” BATS Europe, Nasdaq OMX Europe and Turquoise all launched as MTFs in the second half of 2008, joining first-mover Chi-X.
While prospective members may have previously been deterred from connecting because Equiduct does not offer access to pan-European central counterparties, such as EuroCCP or EMCF, Fischer said market sentiment might have changed in recent months. “Clients have said to me that they would rather stick with incumbent clearing houses in the current climate,” said Fischer. Equiduct plans to offer access to three clearing houses, LCH.Clearnet Ltd, LCH.Clearnet SA and SIX X-Clear, upon its launch.
In the meantime, Equiduct has taken steps to reposition its market data service as a separate function from the trading platform to create an additional revenue stream.
Equiduct’s VBBO (volume weighted best bid and offer) is a mathematically-calculated best price for European equities, which corresponds to the price that investors would receive with ideal partial executions in all key reference markets that trade a particular security.
Fischer contends that at the time VBBO was launched in April 2008, fragmentation was not yet pronounced enough for it to be an effective product. Now, he said, “with more fragmentation, our VBBO and trading offering looks more compelling.”