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Turquoise Opens Doors
August 15, 2008
Turquoise, a pan-European multilateral trading facility (MTF) backed by a consortium of investment banks, began limited operations at 8 a.m. in London today.
The venue, first announced in November 2006, will become fully operational Sept. 5. Its launch coincides with that of its clearing services provider, Depository Trust & Clearing Corp. subsidiary EuroCCP, which currently has 15 participating firms, including Turquoise’s nine owners--BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch & Co., Morgan Stanley, Société Générale and UBS.
Turquoise has begun trading in ten equity issues, five each from the U.K. and Germany. Over the next two weeks, securities from Austria, Belgium, Denmark, Finland, France, Ireland, Norway, Portugal, Sweden, Switzerland and the Netherlands will be added to the platform. By Aug. 29, Turquoise expects to be trading 1,500 stocks. During the limited trading period “we expect low overall trading volumes,” Turquoise CEO Eli Lederman told Securities Industry News, “while members enter a small number of orders for the first time from their production systems and verify the configurations of smart-order routers and other trading apparatus.”
The MTF is using a trading platform from Stockholm-based Cinnober Financial Technology and obtaining real-time European equity market data from technology provider and agency brokerage NeoNet, another Swedish company. BT Group’s financial extranet operator, BT Radianz, is providing hosting services and low-latency connectivity through two data centers in London. “We have integrated the best vendors and service providers to create the trading platform and are very focused on our imminent, full launch,” said Turquoise CTO Yann L’Huiller. “We aim to ensure our platform will respond to the needs of the market on every level.”
“We’re very pleased to have gotten to this point, and we recognize that we still have a lot of hard work to do,” said Lederman. “We’re committed to extending our member base and to exposing more widely the full range of Turquoise’s benefits.” Spanish and Greek equities will become available once certain legal issues with cross-border trading there are resolved, he said, with more countries to follow.
Turquoise will not initially handle Italian equities. In a July 29 letter to Turquoise members, Lederman said that depository Monte Titoli--acquired by the London Stock Exchange (LSE) last year through its purchase of Borsa Italiana--“will not allocate resources to work with EuroCCP on the agreed schedule.” In a rebuttal statement, Monte Titoli noted that it had never been “directly approached by Turquoise in relation to the launch of its pan-European trading business in Italy” and that its migration to the Tradelect trading platform was the reason for the delay.
Turquoise is going live in a region that is rapidly evolving under the best-execution requirements of the Markets in Financial Instruments Directive (MiFID), which went into effect in November. U.S. alternative trading systems operators such as Nyfix, Liquidnet and Investment Technology Group have already established platforms in Europe. SmartPool, a dark book owned by NYSE Euronext, HSBC and BNP Paribas, is expected to roll out later this year, as are Borse Berlin’s Equiduct Trading and a pan-European venue from Nasdaq OMX Group. More venues, including Baikal, a joint venture of LSE and Lehman Brothers, are slated for next year.
Chi-X Europe, operated and majority owned by New York-based agency brokerage Instinet, began operations in March 2007 in anticipation of MiFID. It regularly garners more than 15 percent of trading in FTSE 100 stocks and nearly 10 percent in other European indexes, according to Chi-X Europe CEO Peter Randall, and has been successful in attracting new liquidity to Europe.
