Improved smart order routing (SOR) technology and a consolidated tape of European pre-trade data will help Chi-X Europe, the first displayed pan-European multilateral trading facility, which celebrates its second birthday today, build on its existing success, according to the platform’s management.
“The plans and targets Hirander [Misra, COO, Chi-X] and Peter [Randall, former CEO, Chi-X] had two years ago have been surpassed and the success since then has been consistent,” Mark Howarth, CEO, Chi-X, told theTRADEnews.com.
In March 2009, Chi-X’s market share across Germany, UK, Netherlands and France was 13.3%, according to the company’s own figures, up from 6% in March 2008. According to the Fidessa Fragmentation Index, a weekly guide to where trades were executed in Europe, Chi-X commanded a pan-European market share of 11.3% in the week ending 27 March.
“If SOR and trading systems continue to improve, then this time next year we would expect to have an even greater market share,” said Misra. “We see a greater opportunity to capitalise on people’s growing comfort with MTFs if SORs start to work as effectively as possible. The industry is not where it needs to be with SOR and best execution and this will be increasingly important this year.”
The creation of a European consolidated tape could also facilitate trading on MTFs, boosting Chi-X’s position. “The industry needs a consistent standard and framework for establishing a Europe-wide consolidated tape,” added Howarth. “This will reduce concentration risks – as a reference price will continue to operate even if a venue goes down – and will make it easier to monitor and measure execution quality.”
Looking to the future, Misra notes that although Chi-X has gained a big advantage from being the first displayed MTF in Europe, continuing to stay ahead of the pack is key to maintaining the success of the platform.
“We have done a lot of work in becoming the first MTF to offer sponsored access and central counterparty interoperability,” said Misra. “In addition, in the last six months, we have broadened the instruments on the platform and extended our offering to small- and mid-cap stocks as well as exchange-traded funds.”