Pan-European multilateral trading facility (MTF) Nasdaq OMX Europe will launch a new equity stake incentive programme in June in a bid to encourage more trading on the platform. The scheme will reward members who trade certain volumes on the platform with options to buy shares in parent company Nasdaq OMX Group.
The programme will make a total of 1.3 million shares of common stock of the Nasdaq OMX Group available to members in two phases. The first phase, which runs from 1 June to 31 August, comprises 500,000 shares. A customer who trades more than 0.25% of all European trading volumes on Nasdaq OMX Europe – the minimum threshold – will have the option to buy 50,000 Nasdaq OMX shares.
Any trading above the minimum threshold will be rewarded proportionately; a firm trading twice the 0.25% threshold would be entitled to options for twice the number of shares. In theory, a firm trading 2.5% of pan-European trading volumes on Nasdaq OMX Europe could collect the entire allocation for the first phase.
Equity stakes will also be made available if a member trades 0.75% of the total trading of a specific European blue-chip index on Nasdaq OMX Europe.
The remainder of the 1.3 million shares will be available in the programme’s second phase, beginning on 1 September. The thresholds will depend on the interest shown in the first phase.
According to Charlotte Crosswell, president, Nasdaq OMX Europe, the scheme could attract different types of members on to the platform.
“Some of the high-frequency players from the US have started to make their presence felt in Europe,” Crosswell told theTRADEnews.com. “They have been trading on Nasdaq in the US for quite some time and we already have good relationships with them. We have heard positive things from high-frequency players about the attractiveness of our equity stake scheme and hope we can attract more of them to the platform.”
Crosswell also noted that trading on the platform had reached a plateau since the end of January and the new scheme was part of a plan to kick-start growth.
“It became clear that we needed a strategic focal point away from our pricing promotion,” said Crosswell. “Many of our customers have exposure to different markets across the world, so an incentive scheme based on the Nasdaq OMX Group listed equity allows our members to obtain a tangible value that can be influenced by their own participation.”
Nasdaq OMX Europe currently has the lowest market share of all the four established displayed pan-European MTFs. According to the Fidessa Fragmentation Index, a weekly analysis of where European stocks are traded, Nasdaq OMX Europe accounted for 0.1% of total European trading last week, compared with 2% for BATS Europe, 2.5% for Turquoise and 11.3% for Chi-X.
Nasdaq OMX Europe is not the first of its peers to attempt to use equity stakes as an incentive to boost volumes. Turquoise, a broker-backed MTF, introduced a scheme last December that rewards members who post a certain level of liquidity with an equity stake in the platform.