Pan-European multilateral trading facility (MTF) Turquoise is planning to take steps to reverse the steep drop in its market share caused by the expiry of market making agreements with founding member banks on 13 March.
Turquoise’s market share fell to 2.42% of European equity trading value on 19 March from 6.19% on 13 March – the day its market-making agreements with its founding members expired – according to statistics from the trading venue. This represents a drop of 60.9%.
Turquoise’s own figures show that its daily traded values slumped to EUR 821.9 million on 19 March from EUR 1.5 billion on the day the liquidity provision agreements expired – a fall of 44.4%.
“We knew there would be some effect and it has been significant,” Eli Lederman, CEO of Turquoise, told theTRADEnews.com. “We are looking at this very carefully and we are going to take steps, which we will announce next week, to stabilise Turquoise and return us to where we were.”
Lederman declined to comment further on the steps, but is sanguine about the MTF’s recovery prospects. “One of the important things about Turquoise now compared with when the market-making agreements were in place is that it is a more natural market,” he said. “Some of the market makers that had been less important on Turquoise are now seeing the platform as a better opportunity. At the same time, we have recently added some significant new clients.”
While admitting that it was difficult to say how long the recovery would take, Lederman added, “We are well-positioned in terms of our technology and the fact that we continue to sign up significant new clients,” he said. “We are going to address this setback in an accelerated way.”
Turquoise’s market share of individual indices has also fallen markedly, according to the platform’s own statistics. As of 13 March, its largest market share was in the Dutch AEX index, where it commanded 10% of the trading. By 16 March – the following Monday – its share of AEX trading had dropped to 5.58% and by 19 March it had fallen further to 4.21%.
The MTF’s share of trading in stocks listed on France’s CAC index fell to 3.79% on March 19 from 9.09% on 13 March, its share of Germany’s DAX fell to 2.95% from 7.25%, and the UK’s FTSE 100 to 2.51% from 7.13%.
The market-making agreements from Turquoise’s founding banks came into force in mid-September last year, shortly after the platform started trading its full complement of stocks on 29 August.
To facilitate Turquoise’s launch, the nine banks – BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Société Générale Corporate & Investment Banking and UBS – committed to making markets in Turquoise-traded stocks and having their respective smart order routers connected to the platform.