Pan-European trading platform Turquoise has revealed a raft of plans designed to boost trading on the platform, including undercutting the taker fees charged by rivals Chi-X and BATS Europe.
Starting today, Turquoise has cut its fee for removing liquidity to 0.28 basis points from 0.35 bps. Chi-X and BATS Europe both charge 0.30 bps. Only Nasdaq OMX Europe, which is currently charges 0.25 bps as part of a price promotion, is cheaper.
Turquoise has cut its fee to encourage more firms to take liquidity. “We have the best price for a significant number of the stocks for 15-20% of the day, and are equally priced for a larger percentage of the day, but our market share doesn’t reflect that,” Adrian Farnham, Turquoise’s chief operating officer, told theTRADEnews.com. “We have got lots of good prices, but we are not getting as high a match rate as we might have done. We are trying to encourage more taking of the good prices on Turquoise.”
To counter the fee cut however, Turquoise has also reduced its maker rebate to 0.12 bps from 0.15 bps, which could make the platform a less attractive place to post liquidity. But Eli Lederman, Turquoise’s CEO, said the firm has measured and accounted for this risk. “We analysed our market and spoke to a wide range of members, representing different trading strategies, before concluding that a lower taker fee would improve our marketplace,” he told theTRADEnews.com.
Turquoise has also introduced an incentive scheme that will reward those posting a certain level of liquidity with an equity stake in the platform.
In addition, it is hoping to attract proprietary trading firms as shareholders to complement its existing broker ownership and encourage more liquidity posting. “Management, shareholders and the directors agreed it was a good opportunity to attract new shareholders, not just from an equity stake standpoint, but also from a liquidity provision perspective,” said Lederman. “We are looking for three, maybe four, new shareholders. The matter will be resolved this week or next week.”
The company is seeking the new shareholders now because it feels they will be more wiling to support an established platform than a start-up. “The founders were happy to invest in a concept. These proprietary trading firms wanted to see that Turquoise is a serious proposition and that it was really going to happen,” said Farnham. “Now we consistently have a 5% market share, they can see it is serious.”