The battle for Scandinavian market share is set to intensify with a new initiative from domestic exchange operator Nasdaq OMX Nordic to attract overseas flow and the implementation of the London Stock Exchange’s (LSE) Millennium Exchange platform at Oslo Børs.
The new Nasdaq OMX Data Centre Extended, or Node, will give trading companies based in the data centre provider Equinix’s Frankfurt FR2 facility access to the Danish, Swedish and Finnish bourses from 3 December. Nasdaq OMX also offers the trading of Norwegian shares via its Swedish exchange.
Since the platform is provided by the LSE, the installation of Millennium Exchange at Oslo Børs and Nordic-only trading venue Burgundy (which is currently being taken over by the Norwegian exchange and is reportedly migrating to Millennium) will also mean London-based participants will have faster access these markets.
Bjorn Sibbern, senior vice president at Nasdaq OMX Nordic Transaction Services, said his exchange’s new offering was in line with the firm’s attempts to lure foreign desks into trading more Nordic shares. He indicated his firm was more concerned about competition from BATS Chi-X Europe than from other Nordic bourses.
According to Thomson Reuters Market Share Reporter for the month of October, the two venues run by BATS Chi-X Europe had a combined market share of 29.1% of Swedish blue chip index Stockholm OMX, compared to 2.9% for Burgundy. In Norway, BATS Chi-X Europe reached 21.7% market share of the OBX Oslo 25 index, compared to Burgundy’s 0.29% and for the OMX Copenhagen index, BATS Chi-X Europe hit 25.3% to Burgundy’s 0.76%. In Finland, BATS Chi-X Europe took 26.4% of market share for the OMX Helsinki index, compared to Burgundy’s 1.22%.
“We recognise all competition but our main competitors are still the London-based MTFs,” Sibbern told theTRADEnews.com. “Node is a means to offer new members that may already be connected to London-based MTFs a way to easily and cost-efficiently access the primary market.”
Sibbern added Nasdaq OMX hoped to attract at least ten of the 200 members of the Frankfurt data centre over the Node in the next six months. The first node offering, launched in London in May, presently has just under ten clients.
“The access point in Frankfurt will allow members of the Frankfurt data centre to get easier, cheaper, faster access to the Nordic market, copying what we’ve already done in London,” said Sibbern, adding the firm’s central counterparty, co-location offering and INET trading platform have also seen increases in trading volumes of Nordic stocks. “Foreign traders tend to start with large-cap firms in the cash market, then diversify to smaller-cap companies and across different asset classes, like derivatives, fixed income and commodities.”
Trading turnover in Nordic stocks has risen from 6% to 8% of total European trading in the last four years, while foreign trading of Nordic shares has roughly doubled to 60% over the same period, a figure Sibbern expects to modestly rise in coming years.
Oslo Børs announced the successful rollout of Millennium Exchange today and plans to migrate Burgundy to the same platform during the course of next year, offering the trading of all Nordic shares on the same platform. The new technology, which will replace the LSE legacy Tradelect platform at Oslo Børs, will help broaden the reach of the Norwegian market to overseas investors.
“We are extremely pleased with the successful launch of the new trading system,” said Bente A. Landsnes, president and CEO of Oslo Børs. “It is important for Oslo Børs to offer high quality state-of-the-art technology to ensure that our marketplaces remain competitive and to help our customers to offer even better products and services to the market”.
In another sign of further competition in Nordic markets, pan-European trading venue Equiduct will extend its European stock coverage to include instruments in Denmark, Finland and Sweden from 23 November.
The firm’s central limit order book, HybridBook, adopts a maker-taker fee structure that charges participants a fee of 0.2 basis points, while posting liquidity is free, merging institutional and retail flow allowing participant orders and market maker quotes to compete alongside each other.