NYFIX Euro Millennium, the European non-displayed liquidity pool owned by US trading technology firm NYFIX, is on track for long-term success despite the fact that it will make a 2008 loss for its parent, according to Chris Smith, the platform’s head of business development.
“Revenue is not necessarily the best indicator of progress at this stage,” Smith told theTRADEnews.com.
In its second-quarter results, released on Monday, NYFIX announced that costs relating to Euro Millennium were $2.5 million, up from $0.6 million in the second quarter of 2007, when costs from the platform were first published. Total costs for Euro Millennium for the first half of the year were $4.7 million. NYFIX added that, “to date, there have been no material revenues from Euro Millennium as efforts continue to connect new clients and to enhance the electronic trading capabilities of existing clients to take advantage of the platform.”
According to the Q2 results statement, NYFIX expects losses from Euro Millennium, which went live in March, to continue throughout 2008, with the third-quarter loss likely to be between $2 million and $2.5 million.
But Smith said NYFIX is measuring Euro Millennium’s performance against targets laid out in a long-term plan, rather than revenues. “We’re looking at volumes, we’re looking at the markets we’re adding, we’re looking at the experience our clients are getting in terms of things like price improvement,” he said.
In some areas, the platform is ahead of target. “There have been days, for example, where Euro Millennium has seen over $3 billion of value in the system, which has been fantastic – above our expectations for this stage of the launch,” said Smith.
Smith added that the platform has also attracted trading in small- and mid-cap stocks. “In London, for example, where there are about between 700 and 800 [small- and mid-cap] stocks that are traded fairly actively, we have seen volume on average of about 400 a day, which has been terrific,” he said.
Smith admitted that client numbers “are a little low”, but pointed out that independent dark pools such as Euro Millennium are a new concept for many European clients. “In Europe, dark pools are at a very early stage of their development and even some of the really big clients’ use and development of smart order routing technologies, just for lit books, is at its early stages,” he said.
“As this technology becomes more accepted and clients are used to using it more, we will see the number of clients grow and the volumes grow,” said Smith.