Despite the low trading volumes that have characterised Europe's equity markets in 2011, alternative trading venues Liquidnet and Chi-X Europe are proving resilient.
Liquidnet, a buy-side-focused block-trading venue, saw US$41.6 billion principal traded in Europe for the first half of 2011, a 12% increase over the first six months of 2010. Average daily liquidity for Q2 2011 was over US$19.7 billion, a 19% increase over Q2 2010.
In the US total trading volume for the quarter increased 2% year-on-year to 7 billion shares. June volume rose to more than one billion shares, up 18% from June 2010, and average daily volume also rose 18% – to in excess of 49 million shares per day – compared to June 2010. In Q2 2011, Liquidnet accounted for 40% of the day's market block volume on average in any US name it traded; 68% for micro cap, 60% for small cap and 41% for mid caps.
Liquidnet Canada traded US$7.7 billion in the first half of 2011, a 154% increase on H1 2010. In Asia Pacific, principal traded for H1 2011 increased by more than 40% from H1 2010 to US$9.7 billion. The average execution size for Q2 2011 was US$1.3 million, up approximately 37% from Q2 2010.
European trading volumes have still not recovered to their pre-crisis highs. Turnover fell from €6.258 trillion in H1 2008 to €3.585 trillion in H1 2009. Although it picked up in H1 2010, reaching €5.07 trillion in 2010, growth has stalled since with turnover reported at €5.08 trillion in the first six months of 2011.
Chi-X Europe, a pan-European multilateral trading facility, reported over €860 billion worth of shares traded in the first six months of 2011, up 16% on the previous half and almost equal to 2009's total of €869 billion. Turnover for its Chi-Delta dark pool rose to €39.1 billion in H1 2011, 30% higher than H2 2010, and 38% up on H1 2010.
But turnover on Chi-X Europe's lit book fell to €404 billion in Q2, 16% down year-on-year and 11% below the previous quarter. Nevertheless, the number of trades reached 76.5 million on the lit market a 6% increase on the same quarter in 2010.
By comparison the London Stock Exchange Group saw Q2 revenues for equity trading decline by 9% in the UK, across its London Stock Exchange and Turquoise markets, and by 11% on the Borsa Italiana, compared to the same period for the previous year.
Year-on-year Chi-X Europe’s market share increased across the major indices versus the same period in 2010 and several new records were set, including highs of 27.09% in the CAC Next 20 (13 April), 24.62% in the FTSE 250 (28 March), 23.06% in the SMI 20 (14 April) and 21.89% in the MDAX (2 June 2011). In July to date, Chi-X Europe has achieved market share records of 17.14% in the MIB 40 (13 July 2011) and 12.46% in the OBX25 (14 July 2011).
Chi-X Europe is currently the subject of a takeover by BATS Global Markets, however Chi-X Europe continues to operate as an independent company. The proposed deal has been referred by the Office of Fair Trading to the Competition Commission, which is expected to report its decision by 2 December 2011.