European MTFs See Buildouts

Terry Flanagan

Incumbent exchanges churn out new offerings.

Trading venues in Europe oriented to capturing retail transaction flow are taking their place besides those catering to institutions, and trading platforms are plugging into them.

One such initiative is Equiduct, a pan-European multilateral trading facility (MTF) operated by Börse Berlin.

Equiduct has established itself as one of the fastest growing trading venues in Europe, competing with the incumbent markets and capturing up to 1.8% monthly market share on CAC40 stocks.

SunGard was one of the first global providers to add Equiduct to its connectivity portfolio, as it has for other trading venues.

“Following the launch of MTFs aimed at institutional flow and high-frequency trading such as Chi-X, BATS, and Turquoise, these last years have seen the emergence of more retail-focused venues, which aim at trying to capture the retail order flow of incumbent exchanges and lower the cost of trading for retail investors, widely thought to account for 10 percent of main exchanges’ liquidity and considered as ‘captive’ flow,”  Philippe Carré, global head of connectivity for SunGard’s capital markets business, told Markets Media.

“In turn, this has forced incumbent exchanges to propose new offerings to keep this flow, which ultimately should translate into good news for retail investors,” he said.

SunGard recently extended its Valdi trading suite to provide access to BETa, an MTF launched by the Budapest Stock Exchange (BSE) in November 2011 to serve retail investors.

BETa uses the BSE equity trading platform, and offers trading in foreign shares, with market makers supplying continuous liquidity. The BETa product range, initially restricted to Finnish, French, German and Spanish shares, is expected to be broadened in early 2012, with additional products to become available for trading.

“BETa represents a further step in the provision of wider access to European equity markets for retail investors, a development strongly encouraged by MiFID and now supported by SunGard,” said Carré.

Valdi offers access to 184 exchanges worldwide, including a number of MTFs.

MTFs are typically added to the portfolio of venues that the Valdi smart order router platform used by customers can choose to tap for liquidity, said Carré.

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