Pan-European multilateral trading facilities (MTF) BATS Europe and Chi-X Europe have recorded strong starts to 2010, with both setting market share records in January.
BATS Europe has also reached turnover records in both its dark pool and displayed platform. According to its own figures, BATS Europe reported a record one-day turnover of €1.65 billion on its displayed book on 19 January, surpassing its previous high of €1.62 billion set on 15 January. BATS’ dark pool, which launched last August traded €73 million on 15 January.
The MTF reached one-day market share highs of 10.18% in the UK FTSE 100 index and 9.9% in the Italian FTSE MIB index on 6 January, which boosted its overall share of European trading to 5% on that day.
Chi-X Europe has also enjoyed a good start to the year. According to its own figures for 19 January, the MTF attained a 16.81% pan-European market share, putting it ahead of exchange group NYSE Euronext, which achieved a 15.59% market share that day, for the first time.
In addition, Chi-X Europe recorded new market share highs yesterday in FTSE 100 stocks of 27.1%, in BEL 20 stocks of 20.94%, in CAC 40 stocks of 23.07% and AEX 25 stocks of 22.73%.
Other MTFs, including Turquoise, Nasdaq OMX Europe and NYSE Arca Europe, have had a more static start to the year according to BATS’s numbers. The pan-European market share of Turquoise, which will be integrated with the London Stock Exchange next month, has stayed between 2.6% and 3.31% since 4 January, similar to its performance at the end of last year, Nasdaq OMX Europe has only reached 0.94% on a pan-European basis so far this year while NYSE Arca Europe has struggled to break the 0.25% mark.
According to BATS Europe CEO Mark Hemsley, his platform’s good start to the year stems from the addition of new members at the end of 2009 and knock-on effects from aggressive pricing last year.
“As well as new participants starting the connectivity process towards the end of last year, other members who joined following our inverted price promotion last year have also received certification to start trading on BATS Europe,” said Hemsley.
Using the same strategy as its US parent, BATS Europe embarked on price promotions for specific indices last year that rebated members more for adding liquidity than it charged them for removing it. In September, for example, the MTF paid liquidity posters 0.40 basis points and charged liquidity takers 0.20 bps for FTSE 100 stocks. As a result, the MTF’s market share of FTSE 100 trading grew to 7.21% for September from 4.11% in August.
Hemsley said the majority of new clients were broker-dealers or agency houses, but that some market-makers and proprietary trading firms, including stat-arb and high-frequency traders, were also among its new clientele. In addition, he noted that bulge-bracket firms have expanded their use of the MTF, and that their prop and hedging desks are now trading there as well as their electronic trading desks.
Having increased BATS Europe’s market share despite an overall trading activity slump in 2009, Hemsley is confident of growing the platform further in 2010.
“Our original target was to break even by the end of this year and we are fairly hopeful, market conditions withstanding, that this will be the case,” said Hemsley. “Our market share figures have been better than we expected, especially in FTSE 100 stocks, and this has compensated for the lower notional value traded across Europe last year.”