The London Stock Exchange Group has confirmed that is has entered exclusive talks to acquire bank-owned pan-European multilateral trading facility (MTF) Turquoise, currently the second-largest MTF by European market share.
The MTF, which has struggled to grow market share since the expiry of its nine founding banks’ market-making agreements in March, appointed UBS earlier this year to help it find a buyer. Sale documents were sent out to 18 potential suitors and the MTF was expected to pare these down to a shortlist of two or three by the end of September.
If successful, the LSE’s acquisition of Turquoise could help the exchange compete more effectively with the other displayed pan-European MTFs – including Chi-X Europe, BATS Europe and Nasdaq OMX Europe – which have significantly eroded its market share over the past year.
The LSE’s share of displayed order book trading turnover in the UK’s FTSE 100 blue-chip index was 64.2% in August, down from 77.5% in the same month last year, according to data vendor Thomson Reuters’ European Market Share Reporter.
However, it is unclear what the acquisition would mean for Baikal, the LSE’s non-displayed multilateral trading facility and liquidity aggregation service, which was due to launch before the end of this year. Turquoise offers large-in-scale and mid-point dark trading and a functional non-displayed liquidity aggregation service, TQ Lens, which could render Baikal redundant.
The LSE acquired MillenniumIT, a Sri Lankan technology services provider, in September for US$30 million to replace its TradElect trading platform.