Equiduct set to close

Sources have confirmed to theTRADEnews.com that Citadel is pursuing a wind-down of Equiduct, the pan-European retail focused trading platform in which it owns a majority stake.

Sources have confirmed to theTRADEnews.com that Equiduct, the pan-European retail focused trading platform, is likely to be closed.

Equiduct is believed to have lost the backing of its majority shareholder Citadel Securities last week and has been unable to secure additional investors, despite being one of the fastest growing alternative trading venues in the last three years. If the venue were to continue trading, it would soon be unable to pay its creditors, according to the sources.

Anaemic trading volumes and the slow pace of market structure change in Europe have hampered the platform’s growth.

In particular, the absence of a US-style trade-through rule, whereby trading venues are obliged to route orders to the venue displaying the best price, and the continued reluctance of domestic exchanges to embrace clearing interoperability make it challenging for Equiduct to compete on a level playing field.

Equiduct, which has around 30 clients, traded €3.02 billion in December 2012, a meteoric rise from the €5.89 million transacted in March 2010. The platform offers retail brokers the opportunity to trade their flow against a consolidated best bid or offer that is based on prices from Europe’s domestic exchanges and the largest multilateral trading facilities. Borse Berlin and Knight Capital – the US broker and market maker that is in the process of being acquired by GETCO – are also shareholders in Equiduct.

The proposed wind-down of Equiduct comes amid a closure of Citadel’s European execution services business as part of a strategic realignment of its international activities, according to people familiar with the situation. The firm stopped acting as a market maker on the two dark pools operated by BATS Chi-X Europe on Monday and is no longer trading for European clients in the region. Citadel will still offer US clients the ability to trade European equities and is said to be pursuing growth in that area.

Citadel also holds stakes in US bourses: the Philadelphia Stock Exchange; the American Stock Exchange; Direct Edge and BATS Chi-X Europe.