Turquoise to form buy-side advisory panel

Pan-European MTF Turquoise is in the process of setting up a buy-side advisory committee to ensure it appeals to asset managers, according to Eli Lederman, Turquoise’s CEO.
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Pan-European MTF Turquoise is in the process of setting up a buy-side advisory committee to ensure it appeals to asset managers, according to Eli Lederman, Turquoise’s CEO. “Even though in an overwhelming majority of cases the buy-side will not be accessing Turquoise directly, we think it is very important to have them engage, have them understand what we’re doing and be fully supportive of what we’re doing in terms of delivering benefits to them and their clients – the end investors,” Lederman told theTRADEnews in an interview.

The make-up of the panel is still being finalised, but is expected to represent the diversity of the buy-side community. It will be complemented by a sell-side advisory committee, which has already been set up. Turquoise has not disclosed which firms are on the committee, but its membership goes beyond Turquoise’s nine founding banks. This sell-side panel, says Lederman, will allow brokers to suggest improvements to Turquoise.

In the middle of last year, Turquoise drew fire from some buy-side traders because of the lack of details that had been released about the new trading platform and its intentions. Lederman acknowledges this, and says the organisation is now much more forthcoming.

“Last year, when Turquoise was something of a black box to people and there wasn’t much information coming out about what Turquoise was doing, there was some scepticism in the market,” he says. “But now we are much more transparent about what is going on. We are regularly updating people. We are forming the buy-side advisory panel. We’re at conferences. We’re talking to the press. We’ve got a website. We’re being very conscientious about being more open about everything going on, and the feedback has been overwhelmingly positive.”

He adds, “I think the buy-side fundamentally understands that the competition that we’re creating and putting into the marketplace is going to be a positive for them. They are supportive, but they want to know what’s going on.”

The news of the buy-side panel has been well received by some on the buy-side. “This has to be a step in the right direction,” says Tony Whalley, investment director at Scottish Widows Investment Partnership. “One of my big criticisms of BOAT and Turquoise has been that they haven’t consulted with the buy-side at all. There has been absolutely nothing in terms of getting together people from our side of the fence and finding out what our views are. If Turquoise is going to go down the route of getting opinion from the buy-side in terms of where they should go, what they should do and how things should operate, it must be good. It’s what we’ve been crying out for goodness knows how long.”

Because Turquoise is backed by nine large investment banks, there are concerns that buy-side interests will be neglected. But a buy-side advisory panel could help alleviate these worries.

“These concerns are the reason it is important to get input from the buy-side – to ensure you get a balanced viewpoint put forward,” says Whalley. “If you haven’t got the buy-side offering opinions you’re not going to get a balanced viewpoint.”

Turquoise’s Lederman is keen to point out that the buy-side’s interests will not be neglected. “Our major shareholders are sell-side firms, but they are sell-side firms with great reputations for serving clients,” he says. “Also, they are shareholders, and this is an independent company.

I think when you’re open with the buy-side and you explain that to them they are appreciative and supportive.”

Turquoise expects to start trading in September this year. The firm is aiming to trade around 300 European equities in its displayed and non-displayed books. There will be a further 1,200 European names that are only available on the non-displayed book. Lederman says Turquoise’s nine investors have committed to actively make markets in the stocks traded on Turquoise. This, he believes, will give the platform an edge over its rivals.

“If our founders are actively making markets as they are committed to do, there will be regular price improvement in trading on Turquoise relative to trading on the incumbent exchanges and, we would expect, relative to Chi-X or any other MTF that should come along,” he says.