Equiduct “will not” engage in MTF price war

Börse Berlin Equiduct Trading, a pan-European trading platform scheduled for launch later this year, has unveiled its fee structure.
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Börse Berlin Equiduct Trading, a pan-European trading platform scheduled for launch later this year, has unveiled its fee structure.

For its HybridBook platform – Equiduct’s main order book – the firm will employ a ‘maker-taker’ tariff, where it will charge those taking liquidity from the platform 0.30 basis points (bps) and pay those posting liquidity a rebate of 0.15 bps. On a net basis, assuming a 50:50 maker/taker ratio, the price for executing on Equiduct will be 0.15 bps, making it more expensive than Chi-X, but slightly cheaper than Turquoise.

Chi-X charges takers 0.30 bps and pays makers 0.20 bps, resulting in a net charge of 0.10 based on a 50:50 maker/taker ratio. Turquoise’s taker fee will be 0.35 bps and its maker rebate will be 0.15 bps, giving a net charge of 0.20 bps.

“Unfortunately, at the moment, pricing is very much a competitive factor for companies like us who are starting up,” Artur Fischer, joint CEO of Börse Berlin Equiduct Trading, told theTRADEnews.com. “If you are coming to a new market you cannot be more expensive than the incumbent exchanges.”

Despite this, Fischer is keen for Equiduct to avoid a tit-for-tat fee-cutting competition with its rivals. “We have no intention of entering into a price war,” he said. “We could have easily said that we wanted to be cheaper than Chi-X, but I don’t think there is a reward for doing that.”

One part of Equiduct’s model that differs from some of its rivals is the PartnerEx feature – a premium service that allows users to trade at Equiduct’s proprietary volume-weighted best bid and offer (VBBO) benchmark and enables market makers and flow providers to forge direct trading agreements with one another on the platform. Equiduct charges 0.70 basis points for PartnerEx trades. The minimun price for PartnerEx is EUR 0.50 and the ceiling is EUR 15.00 This higher charge has subsidised the HybridBook pricing.

Fischer suggests current price levels offered by MTFs are unsustainable. “The only reason we can afford our HybridBook pricing is because we are able to provide a value-added service in PartnerEx, for which we can charge more.”

Fischer stressed that the decision to adopt a maker-taker fee structure was not prompted by its rivals’ actions, such as the London Stock Exchange’s introduction of a maker-taker pricing structure on 1 August.

“This is not a reaction to LSE or Turquoise,” Fischer said. “It is based on listening to clients and trying to understand their needs. We had a unique model of flat fees, but the market was interested in something else.”

The market participants of Equiduct Trading will pay a one-off regulated market membership fee of EUR 6,000.