Spectrum MTF Aims To Boost Retail Trading In Europe
Spectrum has launched as a new pan-European trading venue to increase efficiency and cut costs for banks and brokers who provide services for retail investors trading securitised derivatives in the region.
Nicky Maan, chief executive of Spectrum, told Markets Media: “Retail trading on venue in Europe has not evolved for 20 years.”
Spectrum, a subsidiary of derivatives trading company IG Group, has been designed to appeal to financial institutions in Europe who allow retail investors to trade on-exchange global leveraged products. Maan added that retail investors cannot connect directly to the venue.
The company is authorised by German regulator BaFin as an MTF. The venue launched this week to trade leveraged turbo warrants (turbo24s), covering indices, currencies and commodities.
“Warrants are a familiar and popular product already traded extensively by retail investors across Europe to allow them to take a view on performance,” added Maan. “However, we will be the first to provide 24-hour retail-focused leveraged trading.”
In addition, investors will not be able to lose more than their initial stake.
Maan continued that the turbo24s will only have to list on Spectrum to trade in eight European markets, which reduces costs for brokers and banks. The warrants can be traded in France, Germany, Ireland, Italy, Norway, Spain, Sweden and the Netherlands – but not the UK. In addition Spectrum will not initially charge for market data and, in six months time, brokers and banks should be able to list new products in one day which increases efficiency and reduces costs.
The venue uses a transparent order book where orders will remain anonymous but with pre- and post-trade information made public and offers bilateral settlement between members, with turbo24s settled within Clearstream, part of Deutsche Börse Group.
“We are in discussions with several banks and brokers,” Maan added. “Our liquidity providers need to provide an even spread of liquidity across all the products.”
Spectrum plans to add new products in the medium to long term as more venue participants are added.
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The cash settled contracts will be listed on ICE Futures Singapore.