Knight Capital, a US–headquartered broker has taken a “significant” stake in retail-focused pan-European trading firm Equiduct as part of its expansion of its European market making business.
Knight’s investment, which builds on a small legacy shareholding from Equiduct’s previous incarnation as Nasdaq Europe, follows the decision by Citadel Securities to take a majority stake in the platform in July 2009. The announcement means that Equiduct now counts two of the US’s leading retail market makers among its backers.
Kee-Meng Tan, managing director and head of Knight’s electronic trading group in Europe, predicted that more retail brokers would join the Equiduct platform in the coming months. Tan, who will join Equiduct’s board, told theTRADEnews.com, “European retail brokers have traditionally executed most of their flow on primary exchanges, but these no longer necessarily constitute the best price possible. Equiduct essentially supplies retail brokers with a smart order router at very low cost so that they get the consolidated volume-weighted best bid or offer for their size of trade. Cost of execution is also reduced by Equiduct’s single clearing charge per trade. It’s a competitive and compelling model.”
Equiduct displays the best bid and offer available across multiple European trading venues for more than 1,000 securities and pledges to match the best price via its network of market-makers as well as minimising post-trade costs through various clearing and settlement providers. Knight already acts as a market maker on Equiduct’s PartnerEx service, which is being rebranded as BEST.
As well as providing liquidity to Equiduct clients since December 2009, Knight is also a leading liquidity provider to the UK retail market. The firm unveiled the European version of Knight Link, a crossing network that mixes both retail and institutional trading flow in over 700 European equities in November 2009. According to Tan, daily turnover on the platform has grown from US$100 million at launch to US$400 million in May. Knight will also be offering liquidity to former clients of Nasdaq OMX Europe, the multilateral trading facility, which will migrate clients to Equiduct following the closure of its operations at the end of this month. “We aim to become one of the largest providers of liquidity in European stocks,” said Tan.
As part of the transaction, Börse Berlin will maintain its current shareholding in Equiduct and continue to provide the platform with regulated market infrastructure and supervision.
The transaction is expected to close by the end of June 2010.