Pan-European multilateral trading facility (MTF) Turquoise has revealed plans to start trading depository receipts (DRs) this autumn in a bid to diversify beyond cash equities. The new venture will pit the MTF against incumbent exchanges’ depository receipt trading services, such as the London Stock Exchange (LSE)’s International Order Book.
The Turquoise service will cover Europe’s 50 most actively-traded depositary receipts. “We looked at which depository receipts our members were trading and chose the list on that basis,” Adrian Farnham, chief operating officer of Turquoise, told theTRADEnews.com. “It happens that a lot of the DRs are traded on the London Stock Exchange’s International Order Book, but we are not specifically targeting the London Stock Exchange.”
Trades will be cleared through pan-European clearing house EuroCCP. The trades will initially settle at Euroclear Bank, but Turquoise also plans to offer settlement at US post-trade utility the Depository Trust & Clearing Corporation, EuroCCP’s parent. US settlement will be particularly useful for Turquoise members trading American depository receipts, according to Farnham. “We will introduce a consistent post-trade process for our members,” he said.
Turquoise will use the same market model it uses for equities to trade depositary receipts. The instruments will be subject to Turquoise’s maker-taker tariff, which charges 0.28 basis points for aggressive orders and rebates 0.20 bps for passive orders.
The receipts will also be available for execution in both Turquoise’s integrated order book, which offers displayed and non-displayed, large-in-size trading, and its segregated mid-point book, which offers sub-large-in-size dark trading that matches at the mid-point of the European best bid and offer.
Standard Turquoise trading hours of 08.00 to 16.30 UK time will also apply. “All the benefits that MTFs bring to equities, such as speed, cost efficiency and process efficiency, plus more innovative trading market models such as integrated dark and visible and dark midpoint, we can bring to the trading of depository receipts,” said Farnham.