A management walkout within Nordic exchange group OMX may have underpinned fledgling multi-lateral trading facility (MTF) Project Turquoise’s rejection last Thursday of the firm’s bid to become its technology provider, theTRADEnews has learnt.
It is believed that two out of the three key decision makers who had been working on the Turquoise project at OMX left the company before the decision to rebuff OMX's bid was taken.
Uncertainty over OMX's future in light of recent inconclusive M&A discussions with both Dubai Bourse and electronic stock market Nasdaq is also thought to have contributed to the decision.
OMX declined to comment on the alleged management walkout but stressed that its primary focus is merging with Nasdaq, as it looks to help the exchange expand its European operations.
Emerging triumphant over OMX in the bid for the Turquoise technology contract was Swedish vendor Cinnober Financial Technology (Cinnober). Thirty other technology companies were also in the running.
Whilst competitors, Cinnober and OMX are in some ways linked. Cinnober was co-founded in 1998 by two ex-OMX employees and 35 of Cinnobers' current staff have OMX backgrounds, according to Jan Arpi, CEO, Cinnober.
However, Turquoise viewed Cinnober as a better fit. Cinnober's track record is one reason for this, as the banks involved in Turquoise – Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS – are familiar with the firm through its work as technology provider for Project Boat, an investment bank consortium designed to compete with Europe's exchanges in the area of data provision. "Turquoise sees us a proven innovator," explains Arpi.
Familiarity with Boat, though, will not mean the vendor can rest on its laurels when it comes to launching the technology platform for Turquoise, as the two projects are very different. "Boat is purely about trade reporting, while Turquoise is a fully-fledged exchange requiring much more functionality including order routing and matching, as well as a platform offering everything from exchange operations to post-trade management," explains Arpi.
As well as appointing Cinnober its technology partner last week, Turquoise announced its decision to appoint Morgan Stanley executive Eli Lederman to the position of CEO. Turquoise's appointment of both a senior management team and a technology provider has been delayed for several months and prompted criticism that the investment banks backing it would be unable to overcome their conflicting interests, undermining its stated aim of competing with Europe's established exchanges.