New Turquoise aims to topple Chi-X within three years

Turquoise, the pan-European multilateral facility (MTF) purchased by the London Stock Exchange (LSE) in February, has set its sights on becoming the largest alternative trading venue in Europe by 2013.
By None

Turquoise, the pan-European multilateral facility (MTF) purchased by the London Stock Exchange (LSE) in February, has set its sights on becoming the largest alternative trading venue in Europe by 2013.

“Our primary goal is to be the number one pan-European MTF venue within the next two to three years,” said Natan Tiefenbrun, Turquoise’s commercial director. “We want to deliver more value than our competitors. We have lots of interesting ideas and services in the pipeline that will save customers money and help us to grow our business.”

According to Tiefenbrun, all three of Turquoise’s existing service segments – its integrated lit and dark book, non-displayed mid-point book and TQ Lens aggregation service – will continue to operate, but with additional ideas and functionality that were developed at Baikal.

This includes allowing clients more flexibility on which counterparts they trade against in the mid-point dark book. “We want to position the dark book in a way that retains the safe character of the venue, i.e. free from gaming,” said Tiefenbrun. “We plan to do this by leveraging Turquoise’s superior surveillance capability and by introducing functionality originally planned for Baikal, such as the ability for participants to exercise more control over who they interact with.”

In addition, Turquoise plans to introduce a sponsored access service for its lit book, which will enable members to access the platform faster and entice more high-frequency flow to the platform. It also plans to continue improving TQ Lens, which routes non-displayed orders to seven liquidity partners. Turquoise has already added UK, Czech and Hungarian stocks to the platform since the merger.

The LSE has already started work on migrating Turquoise from its current Cinnober-supplied technology platform to Millennium, a new trading system built by MillenniumIT, the Sri Lankan technology company bought by the LSE for US$30 million last October.

At the end of this summer, Turquoise and the LSE’s UK market will be operating from the same data centre, using the same order entry and market data protocols. Clients that trade on both Turquoise and the LSE stand to save money as a result, by having the ability to use the same order routing gateways, co-location and connectivity solutions for both venues.

Turquoise has also finalised the management structure that will serve under CEO David Lester, also director of information services at the LSE. As well as Tiefenbrun, who previously held the position of commercial director at Baikal, Mark Ryland migrates his Baikal role, as head of technology, to Turquoise. Adrian Farnham, who joined Turquoise in December 2007, will remain as chief operating officer of the platform. Anthony Ball, who joined Turquoise in 2008, takes the position of chief financial officer.

Earlier this month, the LSE added three new banks to Turquoise’s investment bank shareholders. Nomura, Barclays and J.P. Morgan Cazenove each paid £1 million for a 3% stake, taking the total number of shareholders to 12.

Tiefenbrun asserts that, while not all shareholders will sit on Turquoise’s newly-formed management board, the reformed governance structure of the MTF will be much “cleaner”.

“Our bank partners have an economic stake and are among our biggest customers, so they will definitely have a say in the services we offer and the direction the platform takes going forward, but not to the exclusion of other customers,” he said. “Having the LSE as an independent, majority shareholder brings a level of neutrality to the platform and strong governance, and will ensure that the board is focused on the best interests of the business as a whole.”