Turquoise upgrade adds rights issue trading

Pan-European multilateral trading facility Turquoise is now positioned to trade European rights issued for any of its 2800+ listed stocks in both dark and lit order books.

Pan-European multilateral trading facility (MTF) Turquoise is now positioned to trade European rights issued for any of its 2,800+ listed stocks in both dark and lit order books.

Turquoise has been set to trade rights issues since last month, a move Turquoise CEO Robert Barnes says is the result of customer demand.

“Last year, a number of Turquoise’s customers asked us to add the ability to admit European rights,” he said. “We want to listen and respond to our customers and this is one more example of us doing that.” 

Rights issues allow existing shareholders to purchase a predetermined number of shares at a predetermined price, and can be traded on exchange. “A feature of rights issues is that we do not know which company in the future will attempt one,” Barnes said. 

“However, when a rights issue is announced, Turquoise is able to admit the rights for trading, and through our partners, the clearing houses, customers will also be able to clear and settle the rights into the same settlement depository as if traded and settled from the primary exchange.”

Barnes said the move would allow members to send orders for both rights and underlying stock through Turquoise, making the process more efficient. 

“Since equity rights are similar to call options, with a limited time window, a move in the underlying shares can have a big effect on the movement on the value of the right price.

“If a platform doesn’t have the rights symbol admitted for trading, either the member won’t bother to send the order to that particular platform, or they’ll send an order for shares and rights and get a reject.”

Turquoise, which is majority owned by the London Stock Exchange (LSE), has reported a 78% increase in value traded in January 2014, compared to the same time in 2013. According to figures provided by the MTF, Turquoise traded €70.7 billion last month – the largest value since it launched.

Last December, Turquoise migrated to a new version of Millennium IT version 8, the same as the LSE and Borsa Italiana.

“Turquoise aims to increase the probability of execution, a term of quality, and this can be done by increasing the heterogeneity of order flow, so widening our membership is very important,” Barnes said. 

Among the new changes, Turquoise now offers self-execution prevention and randomised iceberg orders, which would reduce probability of detection. 

Turquoise is also allowing customers to default execution instructions, allowing orders to now be placed on both Turquoise Uncross and Continuous Midpoint Matching. 

“With release 8, Turquoise provides flexibility for customers to select default execution instruction to start either in Turquoise Uncross or Continuous with no software development effort or cost on their side,” Barnes said. 

“It’s just a small thing, but all these little pieces add up to a more efficient experience for the customer and makes a more level playing field.”