An alternative trading platform based on social media principles has put its planned launch on indefinite hold, citing uncertainty over new regulation in Europe and the US.
MarketBourse, a venue designed to let buy- and sell-side firms select trading counterparts, has sold its underlying technology to a leading infrastructure provider, the platform’s CEO and founder of Chi-X Europe, Tony Mackay, told theTRADEnews.com.
Mackay said MarketBourse had attracted widespread industry interest, but present conditions of the equity market and impending regulatory change rendered other applications of the technology more attractive.
“The uncertainty around MiFID II’s development and regulatory issues in the US mean the equities trading venue business is very challenging and is subject to change over coming years, so we felt the timing wasn’t right for MarketBourse,” Mackay said.
Mackay did not name the financial infrastructure provider that has acquired the technology, but said it would be used for non-equity asset classes. He said MarketBourse would still seek to establish itself as an equities venue in the future.
“We had been looking at this from an equity market perspective, but we have found that the technology allowing the selective linking of buyers and sellers can be applied to other financial asset classes as well as broader business-to-business and business-to-consumer markets,” he said.
The core idea behind MarketBourse was for participants to share trading information in selected circles of other market participants, similar to choosing friends on social networking platforms. The functionality would let members minimise market impact by selecting who they trade with.
Mackay planned to launch the market in equities before moving into other asset classes such as options, while offering bespoke ‘exchange in a box’ configuration for private markets to trade in any asset class. He planned to launch in the US and Europe in 2013, and then in Asia.
Tony Whalley, head of dealing at Scottish Widows Investment Partnership, said the MarketBourse concept had generated support from buy-side firms seeking more flexibility in defining their counterparts.
“MarketBourse would have given buy-side firms the flexibility to trade with the counterparts of their choice, and would have made a lot of sense for the industry,” he said.
Whalley said MarketBourse would have given participants the choice to avoid entities such as high-frequency trading firms that engage in statistical arbitrage.
He added that regulators should take care to implement new market rules that support these types of concepts in the future.
“It’s unfortunate that increasing market regulation has stymied these plans because new rules should promote, not limit, innovation,” Whalley said.
Earlier this year, uncertainty over MiFID II’s final text derailed a plan to create a European consolidated tape. In March, the COBA project – an industry-led initiative to develop a tape that would financially reward providers of data based on price improvement – was also put on indefinite hold, despite having widespread support from buy- and sell-side firms.