Pan-European trading venue Chi-X Europe has received regulatory approval from the Financial Services Authority (FSA) to offer sponsored access for clients of its trading members.
Sponsored access allows clients of Chi-X’s trading participants to connect directly to the platform’s core matching engine, either via proximity hosting in Chi-X Europe’s data centres or through remote access. The service will enable clients anywhere in the world to take advantage of Chi-X’s 500-millisecond internal matching speed.
The service should appeal to high-frequency traders, according to Peter Randall, CEO of Chi-X Europe. “Sponsored access extends the type of opportunity to connect to Chi-X,” he told theTRADEnews.com. “There are some clients for whom speed is even more important than other features of the platform. If a client is directly connected to us, they are going to cut out the latency of the broker’s plumbing and connection.” He added that there has been high demand for the service.
He stressed, however, that sponsored access does not disintermediate the broker. Trading will continue to be conducted in the name of the trading participant, and obligations to adhere to Chi-X Europe’s rules will also remain with the trading participant. “Everything goes through to Chi-X in the broker’s name,” said Randall. “In the event of an issue we would go to the participant, because it is the participant’s responsibility to filter what is sent to the market.”
Randall said Chi-X is the first platform in the UK to offer the service, but he added, “I’m sure other people will apply for permission to do this.” Fellow MTF BATS Europe, due to launch on 31 October, has also said it plans to implement sponsored access shortly after it comes to market.