Mutlilateral trading facilities will soon by recognised as agents of consolidation rather than fragmentation in the European equities market, according to Turquoise CEO Eli Lederman.
Lederman told an audience at the Sibos banking conference held in Vienna this week that the continued existence of national exchanges within the European Union – each with its own clearing and settlement arrangements – was a source of inefficiency and fragmentation that MTFs would serve to eliminate.
“Multilateral trading facilities are actually countering fragmentation at the trading end,” said Lederman, who also suggested that further price improvement opportunities could be expected once alternative trading platforms develop block crossing capabilities.
Turquoise, which is owned by a consortium of nine investment banks, has captured around 10% market share in selected stocks since its soft launch in August.
Scott Riley, director, Chi-X Europe, told conference delegates that domestic exchanges still provided a necessary service in terms of listing and capital raising, but agreed with Lederman that their clearing and settlement arrangements added to trading costs. “When we approached them [the national exchanges] with an innovative trading solution, we could not get access on commercial terms to their post-trade infrastructure,” he said. For that reason, both Chi-X and Turquoise have established their own commercial clearing relationships with Fortis EMCF and EuroCCP respectively to achieve lower clearing costs for customers.
Also speaking at Sibos, Anthony Attia, executive director, head of business change management, NYSE Euronext, said competition between traditional exchanges and MTFs has been overplayed. Acknowledging that the relationship was initially strained, he pointed out that the exchanges themselves are now adopting innovative trading tools, including smart order routing and dark pools as well as either partnering in or forming their own MTFs.