Nasdaq OMX to close pan-European equity MTF

Global exchange group Nasdaq OMX has announced it will close its pan-European multilateral trading facility (MTF). Nasdaq OMX Europe’s last day of trading is expected to be 21 May.
By None

Global exchange group Nasdaq OMX has announced it will close its pan-European multilateral trading facility (MTF). Nasdaq OMX Europe’s last day of trading is expected to be 21 May.

Nasdaq OMX said the decision was made “following an assessment of the financial prospects” of the business. The firm said that its London office and data centres would continue to support its trading and market data operations, including London-based users of its Nasdaq OMX Nordic exchanges.

“Despite our best efforts, the increasingly competitive nature of the MTF space in Europe has meant that the growth of the business hasn’t reached levels necessary for us to realise our stated objectives,” said Eric Noll, executive vice president of Nasdaq OMX said.

Launched in September 2008, Nasdaq OMX Europe struggled to gain more than a 1% share of pan-European trading. According to figures from data vendor Thomson Reuters, Nasdaq OMX Europe traded 0.79% of total pan-European liquidity in March, up from 0.73% in February. The MTF had its best month in November last year, trading 1.13%, or €7.59 billion of European equity turnover.

NASDAQ OMX Europe’s dark pool, NEURO Dark, will also close. Launched on 11 May 2009, NEURO Dark traded 1.01% of the European dark market in March 2010, according to Thomson Reuters. It had fared slightly better in April, trading €439.4 million, or 3.32%, of turnover, up to 27 April.

Nasdaq OMX Europe was pinning its hopes for increased trading volumes in 2010 on its order routing capabilities, expansion into new markets and the lower overall trading fees expected from greater interoperability of European clearing houses.

In March, Nasdaq OMX Europe confirmed its intention to start trading shares listed on the Budapest and Prague stock exchanges from 16 April, bringing the total number of markets in which it offered trading services to 17. Along with BATS Europe, Nasdaq OMX Europe was one of only two pan-European MTFs to offer smart order routing, with the latter presenting four order routing strategies to customers. Nasdaq OMX Europe has also hoped to benefit from increasing trading volumes that were expected to follow from lower post-trade costs.

“People recognise that transaction fees have come down to a point where they are not going to fall that much further. Now all we are hearing about is post-trade and interoperability. That is a valid debate with the MiFID review coming through and the clearing directive later on in the year,” the MTF’s president, Charlotte Crosswell, told last week at the TradeTech equity trading conference in London on 22 April.

Crosswell will continue working with business development initiatives for NASDAQ OMX in London and across Europe. She will also oversee an orderly transition of NEURO customer relationships to NASDAQ OMX Nordic. Hans-Ole Jochumsen, president of NASDAQ OMX Nordic, will assume responsibility for the group’s pan-European equity trading operations.

The impending closure of Nasdaq OMX Europe is a further sign of consolidation in the European trading venue market. In February, the LSE completed its acquisition of Turquoise, an MTF originally established by seven investment banks, while NYSE Euronext’s SmartPool MTF took on customers from Euro Millennium, a non-displayed MTF, in Q4 2009 following the exchange group’s technology arm purchase of NYFIX’s transaction businesses.