Chi-X Overtakes LSE

Terry Flanagan

The MTF surpassed the incumbent LSE in total amount traded last month.

For the first time since its introduction, Chi-X Europe handled more notional volume than the London Stock Exchange over a full month.

According to data compiled by the Federation of European Securities Exchanges, Chi-X during August handled 43 billion trades, processing €213.8 billion ($293 billion) in total transactions. In comparison, the LSE handled 26.3 billion trades worth €205.2 billion during the month.

However, the milestone was achieved in part because of an extra trading day. In terms of average daily cash turnover, the LSE had €9.33 billion compared to Chi-X’s €9.29 billion.

“We have had other good months, July was very good, but August was exceptional,” said Belinda Keheyan, a Chi-X Europe spokesperson. “However, we won’t know until this time next month if this is a trend.”

While this was the first month that Chi-X surpassed the LSE in notional value traded, Chi-X had long been handling the most trades and shares in Europe. Its has been ahead of the LSE in trades conducted for all of 2011.

Thanks to regulation, such as Mifid, competition has opened up in many markets in Europe. Although Chi-X has made significant headway in gaining market share, the company asserts that there is still a ways to go. “Mifid came in and introduced competition, but so far that only took an effect in a small number of countries,” said Keheyan. “There are still important markets like Spain where it hasn’t had an impact.”

Chi-X Europe recently announced that it would launch a pricing promotion in Spain, effective Oct. 1. The initiative is aimed at increasing its market share in the country, which currently stands at about 2 percent. Under the promotion, orders of Santander, BBVA, Iberdrola, Inditex, Repsol and Telefonica, the six stocks accounting for about 80 percent of the total volume traded in Spain, will be free of trading, clearing and settlement fees once clients have traded more than €200 million ($280 million) of those particular stocks within a single month. The exchange, which operates under a maker-taker pricing structure, will also increase the rebate offered to liquidity makers, from 0.2 basis points to 0.3 basis points.

Chi-X Europe was founded in 2007 by Instinet, an agency-only broker. Today, it is owned by a consortium of banks and broker-dealers, including BNP Paribas, Citadel, Citigroup, Credit Suisse, Fortis, Getco Europe, Goldman Sachs, Instinet, Merrill Lynch, Morgan Stanley, Optiver, Société Générale and UBS. Today, Chi-X Europe has about 20 percent market share in Europe.

Chi-X Europe is currently the target of a takeover from Bats Global Markets. The transaction is currently awaiting regulatory approval from the U.S. Competition Commission. A decision on the deal is expected by early December.

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