SWX Europe, the London-based cross-border exchange owned by SWX Swiss Exchange, will cut its trading fees by almost a third from 1 October 2008.
The announcement follows a 15% price reduction in April, when the firm also adopted a maker-taker pricing model.
SWX Europe’s chief executive officer, Lee Hodgkinson, said the new price reductions represented a 30% lowering of the headline on-order book trading fees announced in April. As part of the new pricing structure, the ad valorum fee for posting liquidity will reduce to zero and the transaction fee will fall to CHF 1.
“The reduction and revision of pricing is a core component of our strategy. As a user-governed organisation, we believe in sharing our success with customers,” he said.
The announcement coincides with the launch of trading in five Swiss stocks by Turquoise, the bank-owned multilateral trading facility, as part of its soft launch.
Turquoise launched with five UK and German stocks last Friday and has so far added French, Dutch, Swiss Swedish and Finnish stocks this week. The platform goes live with
stocks on 5 September.
Hodgkinson added that SWX Europe’s introduction of a maker-taker pricing model – which rewards firms that post liquidity and charges those that ‘take’ it – had proved popular with clients. “Most customers have migrated to the maker-taker model and we think it will be the model for the industry for the foreseeable future,” he said. “It’s too early to comment on the extent to which maker-taker has changed broker behaviour, but we believe at this stage that it is the best way to reward commitment of liquidity.”
Both current pan-European MTFs, Turquoise and Chi-X, launched by agency broker Instinet Europe, use maker-taker pricing models. The London Stock Exchange announced maker-taking pricing in August. “As well as appealing to MTFs trying to establish market share, maker-taker is also attractive to incumbents because the fee differential allows exchanges to reward those that contribute most to the price formation process,” said Hodgkinson.
SWX Europe’s announcement follows the release earlier today of financial results for the first half of 2008 by Swiss Financial Market Services, the parent of SWX Europe and SWX Swiss Exchange. SFMS reported sales revenues of CHF 773.6 million (US$ 710.3 million) in the six months to June, with sales revenues from securities trading accounting for CHF 272.4 million (US$ 249.9 million). However, exchange turnover from SWX Swiss Exchange and SWX Europe fell 17.8% to CHF 1.037 trillion (US$ 0.951 trillion).
SWX Europe’s Hodgkinson said the platform’s performance was in line with other exchanges. “Our market share (in the trading of Swiss blue-chip stocks) remains steady at around 90%. Almost all exchanges globally have seen a reduction in turnover compared to 2007 and we’re no different,” he said. “While Q2 2008 volumes were lower than Q1, we expect Q3 to see an improvement, albeit not matching the heights of the same quarter last year. We’re still buoyant, but not perhaps quite as positive on volumes as 2007, which was stellar.”
In its results announcement, SFMS – formed in January following the merger of SWX Group, Telekurs Group and SIS Group – announced that it would operate under the name of SIX Group AG.