UPDATE: Euronext mulls maker-taker pricing for new MTF

Exchange group NYSE Euronext is considering a maker-taker pricing structure for its new multilateral trading facility (MTF), which is scheduled for launch in November.
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Exchange group NYSE Euronext is considering a maker-taker pricing structure for its new multilateral trading facility (MTF), which is scheduled for launch in November. The announcement comes as fellow exchange Nasdaq OMX confirmed regulatory approval for its MTF.

“The pricing is not defined yet, but we have to build liquidity in non-Euronext stocks from zero, and we have to find a model that helps us with that,” Cees Vermaas, executive director, European sales at NYSE Euronext, told theTRADEnews.com. “A model that rewards liquidity providers, such as the maker-taker model, is likely to be used.”

The firm is also still in the process of choosing a clearing provider for the new platform. The choice is between EuroCCP and Fortis’s EMCF, the pan-European clearers that have been established to serve the new wave of MTFs. Euronext will use EuroCCP to clear trades in SmartPool, the dark pool it plans to launch in October, but its MTF may also use EMCF, the clearing provider for Nasdaq OMX Europe, Chi-X and BATS Europe.

“EMCF is doing a good job in Europe,” said Vermaas. “These kinds of initiatives create opportunities for those who are active in platform arbitrage. It is important to seek connections with parties that are playing an important role, so we also see EMCF as a serious candidate.”

NYSE Euronext’s MTF is entering an increasingly crowded market. Chi-X and Turquoise are already operational, and Nasdaq OMX Europe is scheduled for launch on 26 September, making it the first exchange-backed MTF to enter the fray.

The two main selling points of NYSE Euronext’s new MTF, according to Vermaas, are that it will be open to existing members and will interact with Euronext’s other offerings – its regulated exchange and SmartPool. “The interaction between these units, together with access to existing members, provides an offering that is not comparable to any other initiatives on the market,” he said.

The access provided to Euronext’s existing members in particular could help give the MTF a jump-start. “That’s a big plus: it means we won’t have to sell this from scratch,” said Vermaas. By contrast, Nasdaq OMX’s members will have to sign a separate agreement to use Nasdaq OMX Europe.

As NYSE Euronext unveiled its new MTF, Nasdaq OMX Europe received regulatory approval from the UK’s Financial Services Authority, paving the way for its 26 September launch.

Charlotte Crosswell, Nasdaq OMX Europe’s president, thinks the platform’s September launch will give it a competitive edge.

“I’m very glad we are going live in just under three weeks, and I see it as an advantage,” she told theTRADEnews.com. “This space is getting busier and there are certain advantages to be one of the first few out.”

The firm’s pan-European routing service should also stand the MTF in good stead, Crosswell claimed. “A lot of customers have suggested they will be putting some new volumes to us,” she said. “Because we are the first European exchange to offer a pan-European market, and you can trade across Europe through a single connection to us, that has been very attractive and clients may be trading other markets than they have before because of the routing technology.”