Investment bank J.P. Morgan has bought a stake in SmartPool, exchange group NYSE Euronext’s European dark pool, which is scheduled to launch in November. The size of the stake and the price paid were not disclosed.
J.P Morgan joins fellow banks BNP Paribas and HSBC, which have both been investors in SmartPool since the project’s inception last year. SmartPool will operate as a multilateral trading facility (MTF) and be regulated by the UK’s Financial Services Authority (FSA).
“As MTFs evolve, we will continue to connect to them to provide best execution to our clients, and will evaluate potential investment opportunities on a case-by-case basis,” Lee Cook, head of cash equities EMEA, J.P. Morgan, told theTRADEnews.com. “By investing in SmartPool, we feel we have the opportunity to help contribute to the developing market infrastructure in Europe.”
Yvette Roozenbeek, executive director, head of strategic development, NYSE Euronext, added, “We always said we would be open for other shareholders to join, and J.P. Morgan is in our view a very good partner for this platform.”
The door is open for more banks to invest in SmartPool, according to Roozenbeek, but NYSE Euronext will retain a majority stake in the MTF. “SmartPool is an independent platform run by NYSE Euronext as the majority shareholder. We won’t change that,” she said. “NYSE Euronext is providing the technology for this platform as well as the infrastructure, and in that capacity we would prefer to stay a majority shareholder.”
SmartPool is close to completing its preparations for launch. The links with the two clearing providers, LCH.Clearnet and EuroCCP, have been tested and are running. The platform’s software has also been tested. “We are now making sure clients are getting up and running on this platform,” said Roozenbeek. “We will start with a soft launch in November to make sure we can do that properly and make sure everyone has the time to put everything in place.”
The soft launch will run through to the end of January next year. The platform is expecting to get FSA approval within the next two weeks.