The pair have been in partnership since 2016. The deal brought the newly rebranded Turquoise Plato to market with the aim of developing efficiencies in the European equities block trading space.

The reason behind the termination is unconfirmed. Plato and Turquoise declined to comment beyond their provided statements.

“Plato Partnership and Turquoise have worked together to drive innovation and positive change within the equities marketplace,” said Mike Bellaro, chief executive of Plato Partnership in a statement on Thursday.

“Though our commercial partnership has come to an end, the collaboration has achieved positive change in block trading and market efficiency.”

Under the umbrella of the partnership, Turquoise Plato Block Discovery won The TRADE’s award for Outstanding Block Trading venue at Leaders in Trading in 2017.

In the same year it launched Turquoise Plato Lit Auctions.

Adam Wood, CEO of Turquoise Global, LSE said in a statement: “We thank Plato for a successful partnership that has helped bring efficiencies to the European equities market. Turquoise will continue to engage closely with the buy-side and sell-side to develop best practice guidance and deliver increased efficiencies in anonymous European equity block trading.”

Several years after its initial agreement, Turquoise Plato launched its Trade At Last functionality in 2020 which allows traders to submit firm and conditional orders for an additional ten minutes after the closing auction has completed its price formation process and published the official closing price at 4.35 pm.

“As a buy-side participant, I have seen first-hand the progress made through our partnership with Turquoise. Together, they have made great progress in block trading, enhancing liquidity and trading opportunities for the buy-side community,” said Simon Steward, buy-side chair of Plato Partnership, in a statement on Thursday.

“Plato will continue to champion initiatives that meet the evolving needs of buy-side participants, ensuring that our market remains dynamic and efficient. Our ongoing projects, such as addressing high market data costs and exploring innovative US trading mechanisms in Europe, will continue to drive our mission forward.”

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Upwards of 30% of volumes now take place in the Closing Auction in Europe. This Editors’ Choice category – which is new to Leaders in Trading 2023 – is designed to celebrate those venues most committed to innovating the final portion of the trading day to help their clients meet the new demands of the market as this trend continues to develop.

Among the key players in this landscape, The TRADE has selected Aquis Exchange, Cboe Global Markets, SIX Swiss Exchange, and LSEG’s Turquoise for the 2023 shortlist, following various individual achievements over the last 12 months.

Aquis Exchange

Aquis Market at Close has gained significant traction over the course of the last 12 months, now operating in 14 markets and representing 5% of all value traded across Europe in the Close. It is now the largest alternative closing auction mechanism in Europe. 

Aquis’ MaC operates according to a sequential four-phase execution process. According to the exchange, MaC minimises user risk by rejecting or cancelling orders for a stock if the market-of-listing auction for that stock is extended or cancelled. While clearing and settlement on the mechanism takes place in the same way as other executions on Aquis, members can also choose to enable clearing suppression for trades matched against themselves.

In the past year, Aquis added a third client to the MaC and launched a new pricing model aimed at giving members the option to trade at 0.1bps. “This opens up the offering to the wider market, with particular appeal for smaller firms,” the venue confirmed. As an alternative to the primary exchanges, the MaC brings greater competition to the closing auction sphere. The venue claims that clients save 80% of the costs of trading in the close on the primary when using the MaC.

Cboe Global Markets

Launched in Summer 2020, Cboe Closing Cross (3C) is a mechanism aimed at allowing traders to continue trading after market close in Pan-European markets for a 25-minute window. It’s designed as an alternative to closing auctions which have continued to surge in popularity, particularly in Europe, in recent years.

Cboe Closing Cross allows members to enter limit orders into frequent or periodic auctions that run every 15 seconds. The system claims to avoid the complexity and costs associated with other end of day trading sessions, instead offering a “one stop solution for customers looking to execute their post close trading activities across 18 European markets.”

Unlike other closing mechanisms available it does not utilise order lock ins, allowing for greater flexibility around cancellation at any time which reduces risk for users. It also boasts full order book transparency including pre-trade in its data feed and indicative crossing summaries, meaning all market participants can see in price and size or quantity in real-time for all price levels that are predicted to execute in the cross.

In the US, Cboe has a separate alternative to primary market closing auctions and off-exchange venues for execution of Market-On-Close (MOC) orders, named Cboe Market Close (CMC). Also launched in 2020, members can route MOC orders to CMC, where they are pre-matched with other MOC orders at 3:49 pm Eastern Time. CMC will publish its matched shares following the cut-off time. The trades are then executed when the official closing price is published, saving participants from paying closing auction fees charged by the primary listing market on orders that are not price forming.

SIX Swiss Exchange

SIX Swiss Exchange launched a new functionality to protect asset managers from market impact when executing large orders at the Close, in April. Named the Closing Auction Volume Discovery (AVD), the new functionality is built on SIX’s dark pool SwissAtMid and has a hidden order type that supports discrete submission of liquidity into the auction that was previously withheld or place on alternative venues. The new functionality brings the hidden liquidity into the SIX Swiss Exchange order book where it’s executed if it’s flagged.

This liquidity AVD automatically checks whether there is a buyer on the other side of the market that wants to buy or sell the shares. If a match is found at the closing price, the two counterparties will be automatically matched without impacting the closing price. If a match is not found then there is no trade, but the order is still never disclosed to the market.

The exchange claims the new offering enhances speed of execution, meaning firms can now execute in one session as opposed to taking four or five days to unwind. Speaking to The TRADE at TradeTech Europe 2023 Simon Mason, head of equity products for UK and Ireland at SIX, said the new dark order is designed to help buy-side users minimise their market impact while also still making the best of the Closing Auction.

Turquoise

Launched in 2020 as part of a collaboration between the London Stock Exchange Group and not-for-profit group Plato Partnership, Turquoise Plato Trade At Last is a mechanism whereby investors can seek further liquidity following the closing auction of LSEG’s primary market – or the relevant European primary market for their securities.

The Trade At Last mechanism allows traders to submit firm and conditional orders for an additional ten minutes after the closing auction has completed its price formation process and published the official closing price at 4.35 pm.

This is done via a dark undisclosed execution channel. “We are able to do this whilst respecting the necessary price formation process of the primary venue,” the exchange group confirmed. Turquoise Plato Trade At Last recorded the most active day of the year so far on 20 April with €5.4mn traded through the functionality and recorded its second largest ever trade on 14 August. In H1 2023, over €53 million (single) were executed on Turquoise Plato Trade at Last, 47% higher than the total value traded in the whole of 2022.

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BlackRock promoted Robert Mitchelson to a new position as EMEA head of fixed income and FX trading. Mitchelson is a longstanding BlackRock stalwart, serving as EMEA head of rates trading in the London office for the past years, and holding the role of senior rates trader with the firm for 15 years previous, bringing his total time with BlackRock to nearly two decades. He started his career as a rates and FX trader with Credit Suisse Asset Management, where he spent nearly eight years. 

JP Morgan appointed Oliver Hyde as vice president, equities trading. Hyde was promoted to the role after spending nearly seven years at the firm in a variety of roles. Hyde has served as an equities trader for the past four years and prior to that, spent a year in an equities sales position. He originally joined JP Morgan in 2016 as a summer analyst, after which he became Warwick University Campus Ambassador for the markets division at the bank, incorporating sales, trading and research. Before joining JP Morgan, Hyde served as an intern at a variety of firms including Nomura, Credit Suisse and ICAP.

Mizuho Americas appointed a former Jefferies fixed income specialist to expand its reach and remit in the asset class. Jonathan Bass was appointed as managing director and head of relationship management for fixed income at Mizuho Americas. He joins Mizuho after most recently serving at Jefferies as global head of senior relationship management and global head of fixed income distribution, also based in New York. Prior to joining Jefferies in 2014, Bass spent several years in fixed income and distribution focused roles for the Americas at BNP Paribas, MF Global, BTIG Investment Group, UBS and Citigroup.

Kepler Cheuvreux appointed Jean-Pierre Ané as managing director, deputy group general manager, head of business development. Ané was promoted to the role, having served at Kepler for the last twelve years, most recently, as deputy head of Kepler Cheuvreux Solutions (KCS). Prior to his most recent role, Ané served as head of financial engineering and as a structure. Before joining Kepler, he spent four years at Credit Agricole CIB as an interest rate and hybrid structurer. Prior to that, Ané spent a year at UBS in a wealth management research position.

Elsewhere, Kepler Cheuvreux welcomed Athina Trika to its execution sales team, based in London, to help the firm grow its execution footprint and expertise. She was previously securities trading senior manager, buy-side and business development at the London Stock Exchange Group (LSEG), before which she held various other positions with the group including buy-side relationship manager, business development manager for equities and derivatives, and sales associate for fixed income. She joined LSEG in 2011, prior to which she worked in research for the Greek Ministry of Foreign Affairs. 

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Adam Wood has been appointed global chief executive officer and head of equities trading commercial proposition, reporting to LSEG’s chief executive officer Julia Hoggett, according to an internal memo seen by The TRADE.

Wood had previously been serving as head of Turquoise Europe and securities trading specialist sales, joining the MTF in 2019. Prior to joining Turquoise, he was director of prime brokerage sales at BCS Global Markets.

Previously in his career, Wood also served at ABN Amro Clearing, the London Stock Exchange and spent a period as a trader at Trafalgar Financial Futures.

He replaces long standing Turquoise chief executive officer, Dr Robert Barnes, who left the venue at the end of last year after nine years in the saddle. During his tenure at the helm of the pan-European trading platform, Barnes has built out Turquoise, adding initiatives such as the agreement with the Plato Partnership to rebrand its block trading and uncross services, a relationship which has facilitated over €1 trillion in equities traded.

His departure came alongside that of head of sales and platform distribution for securities trading at LSEG, Scott Bradley, as the exchange group looked to simplify its leadership across asset classes.

The exchange moved into FX for the first time at the start of 2021 as part of its landmark $27 billion take over of Refinitiv, and into the digital assets realm at the through its acquisition of trading technology provider, TORA, in early 2022.

Read more – Dr Robert Barnes is voted The TRADE’s first Industry Person of the Year

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Perhaps one of the biggest stories to break at The TRADE this year was the departure of industry legend Dr Robert Barnes from his role as chief executive officer of the London Stock Exchange Group’s Turquoise.

Announced on the eve of Leaders in Trading 2023 on 2 November, Barnes’ departure was followed by his being named as The TRADE’s first Industry Person of the Year in a live vote on the night. Upon collecting the award, he received a standing ovation from the room after giving an impromptu but inspirational speech.

Barnes departs from LSEG’s MTF at the end of this year after serving as its chief executive officer for the last nine years. He joined in 2013 to replace Natan Tiefenbrun following his departure for Bank of America Merrill Lynch. Previously, Barnes was the founding CEO of UBS MTF. Under his tutelage, UBS MTF became the largest dark MTF in Europe, competing against fellow leading venue the CXE dark pool, operated by BATS Chi-X Europe. He also previously sat on the Securities Trading Committee for the London Investment Banking Association, serving as chairman from 2004-2009.

It is not yet known where his next move will be or who will replace him. Scott Bradley was also announced as a departure from the London Stock Exchange Group (LSEG) as the trading venue looks to simplify its leadership across asset classes.

The TRADE is renowned for its people moves page and so it’s no surprise that up next up in our most read stories for 2022 was the news that hedge fund Millennium had selected a former Morgan Stanley executive, Grant McAllen, to take on a new trading role in June.

McAllen joined the hedge fund after most recently serving at Morgan Stanley for the last eight years as part of its MSET – Morgan Stanley Electronic Trading – platform. Prior to joining Morgan Stanley in 2014, McAllen spent three and a half years at Barclays Capital in a client onboarding and equities trading services role and a year at Instinet and Fidessa in FIX connectivity-focused roles.

At number eight in The TRADE’s most read stories for this year was the announcement in January that BNP Paribas had completed its transfer of Deutsche Bank’s global prime finance and electronic equities business two and a half years after agreeing the deal.

BNP Paribas agreed to take on Deutsche Bank’s clients in July 2019 after the German institution confirmed it would exit equities sales and trading and prime finance in a major restructure. Almost $200 billion of assets was expected to move to BNP Paribas as part of the deal.

The combined unit – along with the referral of clients from Credit Suisse – was predicted to proposal the bank into the top tier of prime brokers: alongside the likes of Goldman Sachs, JP Morgan and Morgan Stanley. In November 2021, Credit Suisse signed a referral agreement with the French bank for its prime services and derivatives clearing customers following its exit from the business stemming from the Archegos debacle.

Market maker Citadel Securities took the number seven spot for most read stories at The TRADE in 2022, with the news that it had forked out $2.6 billion in 2020 and 2021 for payment for order flow (PFOF) annually.

According to 606 reports gathered by the US’ Securities and Exchanges Commission (SEC), Citadel Securities spent the most on PFOF, following by Susquehanna (G1X global execution brokers), which spent a $1.5 billion and Virtu which spent $654 million in the same period.

The story proved to be a timely one as regulators across the globe have begun to pay more attention to the practice following lobbying from participants throughout the course of this year. It’s proved a contentious subject globally, with regulators in Europe and the US exploring the possibility of limiting the practice as some claim it does not channel flow – much of it coming from the mushrooming retail segment – based on best execution.

While the US looks like it is no longer planning to place a blanket ban on PFOF, the proposed limit of the practice is still very much on the table in the UK and Europe. How this plays out remains to be seen.

Check back in tomorrow for our most read stories of the year from six through to four.

The post The TRADE’s most read stories of the year part one: Major departures and acquisition milestones appeared first on The TRADE.

Cboe Global Markets named Iouri Saroukhanov as its new head of European derivatives. Based in London, Saroukhanov will oversee Cboe Europe Derivatives (CEDX), reporting directly to Natan Tiefenbrun, president of Cboe Europe. Saroukhanov replaces Ade Cordell, who will become president, Asia-Pacific, overseeing the business operations of Cboe Australia and Cboe Japan (formerly Chi-X Asia Pacific), alongside holding responsibility for the company’s further expansion into the region. Saroukhanov joined Cboe Global Markets from Bloomberg, where he served as equity derivatives specialist over the last six months. Prior to Bloomberg, Saroukhanov spent nearly 16 years at Liquid Capital Group, most recently as senior trader on the Euro STOXX 50 derivatives desk.

Jupiter Asset Management promoted one of its own, Mike Poole, for the role of head of trading. Poole was appointed to the position after serving at Jupiter Asset Management for nearly 18 years. Originally joining Jupiter in 2005 as a dealer, he later moved to the newly created centralised fixed income dealing desk in 2010 to start trading high yield, investment grade, fins, rates, convertible bonds, government bond futures and FX. He was promoted to his most recent role as head of fixed income dealing in 2017. Prior to joining Jupiter in 2005, Poole spent a year at Barclays Wealth as a portfolio manager.

Former senior abrdn dealer, Matthew Drake, joined UBS Asset Management as an equity execution trader, based in London. He joined the asset manager after spending the last 16 and a half years at abrdn, joining in 2006 as a portfolio analyst for pan-European equities and later becoming an equity dealer in 2008.

Numis Securities appointed James Crammond as a member of its electronic sales and trading team, headed by Nishad Vallonthaiel. Crammond joined the firm from Olivetree Group, where he served as a sales trader for the past year. Before that, he held the same role at Louis Capital Markets UK. Previously in his career, Crammond spent seven years at Liquidnet Europe as an algorithmic trader. In addition, he spent nearly 10 years at HSBC as head of its financial sector. Other previous roles include serving as portfolio manager at Apex Capital Markets, and head of equity trading at BGC Partners.

The post People Moves Monday: A major farewell appeared first on The TRADE.

Dr Robert Barnes

Turquoise CEO Dr Robert Barnes was named Industry Person of the Year last night following a vote by almost 300 attendees of The TRADE’s annual Leaders in Trading. 

The new awards category for 2022was voted for by ballot throughout the evening by all dinner guests, with the votes collected and counted at the end of the night.

Other nominees included Alasdair Haynes, CEO of Aquis Exchange (which won Outstanding Equities Trading Venue); Simon Dove, managing director, head of EMEA liquidity strategy at Instinet (which won Outstanding Trading Technology Provider); Virginie Saade, EMEA head of government and regulatory policy for Citadel; and Natan Tiefenbrun, president of Cboe Europe (with Cboe Global winning Outsanding Exchange Group).  

Dr Barnes, who has served as CEO of London Stock Exchange Group’s MTF, Turquoise, since 2013, won the evening’s vote by a substantial margin. Upon collecting the award, he received a standing ovation from the room, marking the respect and affection in which he is held by the industry. He also gave an impromptu but inspirational speech, marked by quotes from Mohammed Ali.  

Dr Barnes is set to step down as Turquoise CEO by the end of the year, as reported yesterday by The TRADE.  

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Industry veteran Dr Robert Barnes is set to step down as the CEO of London Stock Exchange Group’s (LSEG) Turquoise at the end of this year, The TRADE can reveal.

He will depart from LSEG’s MTF after serving as its chief executive officer for the last nine years.Barnes joined in 2013 to replace Natan Tiefenbrun following his departure for Bank of America Merrill Lynch.

During his tenure at the helm of the pan-European trading platform, Barnes has built out Turquoise, adding initiatives such as the agreement with the Plato Partnership to rebrand its block trading and uncross services, a relationship which has facilitated over €1 trillion in equities traded.

Barnes is one of the most recognisable figures in European equities trading and was a nominee for The TRADE’s inaugural Industry Person of the Year at the Leaders in Trading awards.

It is not yet know where his next move will be or who will replace him. LSEG confirmed his departure but declined to comment further.

Barnes was the founding CEO of UBS MTF and upon his departure first stated he would establish a specialised advisory boutique.

Under his tutelage, UBS MTF became the largest dark MTF in Europe, competing against fellow leading venue the CXE dark pool, operated by BATS Chi-X Europe.

He also previously sat on the Securities Trading Committee for the London Investment Banking Association, serving as chairman from 2004-2009.

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The TRADE is delighted to introduce the illustrious shortlist for one of the biggest awards of our Editors’ Choice range: the closely fought category of Outstanding Equities Trading Venue. In a competitive and crowded landscape, numerous players stand out and this year it was particularly hard to whittle down the longlist. The nominated venues have all stood out over the past year for their innovative approach and outstanding performance: read on to learn more about Aquis Exchange, Cboe Europe, Euronext, Nasdaq European Markets and Turquoise.

Aquis Exchange 

Aquis has seen a year of strong growth, both on its lit platform and with its entry into the dark pool space, following on a promising 2021 performance – last year net revenue reached £16.2 million, representing a growth of 42% on the year prior.  

In April 2022, Aquis Exchange assumed the dark pool activities of UBS MTF, with the service now known as Aquis Matching Pool (AMP). Since then, the exchange has been focused on migrating AMP onto its in-house technology, with the migration concluding in September. 

The exchange has also enhanced its Auction on Demand (AoD) service on both the UK and EU platforms. AoD now supports mid-pegged orders, offers a choice of Day orders or ‘Good for Auction’, and allows members to specify a Minimum Acceptable Quantity. 

Meanwhile, the Market at Close (MaC) order type grew in market share, from constituting 3.4% of European closing auctions in July 2021 to 5.8% in July 2022. 

It has also grown its membership base, with new members such as Optiver and others joining; while in May this year it entered into a collaboration with BMLL to provide insights into market structure dynamics. Through the collaboration and use of BMLL’s Level 3 Data and analytics, Aquis is now able to monitor and evidence liquidity dynamics, and offer its members third-party, independent verification of passive liquidity’s availability on its own venues compared to other European exchange.  

Cboe Europe 

The past 12 months have been a landmark period for Cboe Europe. In equities, it became Europe’s largest stock exchange by market share in April 2022 for the first time since January 2019, and has been the largest stock exchange by market share every month since June 2022, with an overall European equities market share of 24.7% in July 2022 – its highest share since January 2016.  

EuroCCP, Cboe’s wholly owned pan-European clearing house, provides clearing services for CEDX. Beyond its diversification into equity derivatives clearing, EuroCCP has also demonstrated solid performance in cash equities, where it remains the most-connected CCP in Europe, offering equities clearing services to 47 trading venues. It has seen strong gains in preferred clearing, with over 14% of total cash equity volumes on Euronext’s exchanges in Amsterdam, Brussels, Lisbon and Paris cleared via EuroCCP through this model as of 30 June, up from 2% at the start of the year. 

Cboe Europe also deserves a mention for its thought-leadership role, supporting and advocating (often vocally) within the industry on a wide range of issues. It recently collaborated with trade associations on a statement of principles for establishing an EU equity consolidated tape, for example, an issue on which its supportive position is well-known. 

The exchange is also working to make pan-European market data more accessible. For example, making its own data available via the cloud, which means lower infrastructure costs for those consuming it. Other key developments throughout the year include the appointment of Nick Dutton, Cboe Europe’s Chief Regulatory Officer, to the FCA’s Secondary Markets Advisory Committee and the group’s membership of the Sustainable Trading initiative in May.  

Euronext 

The biggest pan-European exchange, connecting seven markets across the continent, Euronext had a strong year over 2021-22 with surging trading volumes and a series of successful acquisitions.  

The group saw its trading revenue swell to €465.3 million in 2021, driven by its completed acquisition of Borsa Italiana from the London Stock Exchange Group (LSEG) in April. In its fourth quarter and full year results, the exchange operator confirmed a 27% growth of trading revenues, alongside yield management in cash trading offsetting lower volumes compared with 2020. Fixed income trading revenue also increased to €65.8 million driven by a 45% growth year-on-year in its MTS cash trading activities. 

The strong performance has continued – trading revenues more than doubled in the first quarter, despite the adverse geopolitical conditions, while the second quarter saw trading revenues jump a further 15% with robust performance across all asset classes.  

In June this year, Euronext also entered into an agreement with Nexi for the acquisition of the former’s technology businesses, which currently powers Euronext’s fixed-income trading platform MTS and Euronext Securities Milan. Thanks to the acquisition of Borsa Italiana Group, Euronext now also operates its own clearing house, Euronext Clearing (ex. CC&G), that is planned to provide clearing services for all its markets starting from 2024, and added a fourth CSD (ex. Monte Titoli) to its network of CSDs, Euronext Securities, in a further move to leverage its integrated value chain. 

Nasdaq European Markets 

Nasdaq’s European Markets delivered a record year in 2021, solidifying Nasdaq’s position as a leading European listings hub with 219 new equity listings, including a record number of 174 IPOs, raising a total of €13.5 billion. Nasdaq has kept this position into 2022, and even strengthened it as its Swedish Growth Market First North overtook AIM as Europe’s hottest market for growth stocks with a strong participation by retail investors. A contributing factor to the success of the Nordic exchanges is Nasdaq´s ability to attract small and medium enterprises (SMEs) to go public on its First North markets, which enables them to grow and perform better and eventually transfer to one of the Main Markets (as around 95% of its listed growth companies do). 

On the trading side, building on the strong momentum of 2020, Nasdaq saw trading volumes hit all-time highs, with equity trading increasing 7.1% to a daily average of just under €4 billion across all markets in 2021. Throughout the turbulence of the pandemic, increasing geopolitical tensions and the war in Ukraine, Nasdaq has maintained a market share of 77% of lit and auction trading in its listed shares, while continuing to reinforce its leadership in the Nordic derivatives market, including Norway, where Nasdaq has achieved a 76% market share in single stock options and +50% on index options. 

Throughout 2021, Nasdaq launched a number of products and services to further support the trading community: including options on the OMXS30 ESG index, the world’s first Carbon Removal price Index with Puro.Earth, and Nasdaq Derivatives Academy, a free educational course aimed at retail investors keen in learning more about derivatives trading. Additionally, Nasdaq has entered numerous strategic partnerships – one of which is creating an exchange system simulation service based on Sequitor technology, enabling the trading community to back-test and optimise their systems in terms of both risk and performance in private sessions. 

Turquoise 

Turquoise and its EU venue, Turquoise Europe, complement London’s primary markets with multiple additional execution channels and liquidity, offering a broad universe of more than 4,100 securities with access to enter prices and trade securities of 19 major European and emerging markets as well as US stocks, IOB Depositary Receipts, ETFs and European Rights Issues, through one interface to its LSEG data centre and membership.  

Turquoise Plato participants have traded more than €1.3 trillion of equities since its launch and continue to set new records. Average daily value traded in the first half of this year through Turquoise Plato neared €1.2 billion, and saw a record trade size of €27 million in December 2021 on Turquoise Plato Block Discovery.  

Turquoise has spear-headed in a number of innovations this year, together with its  customersits customers. Turquoise CDS Plus was launched in partnership with Simudyne, with the aim to be a one-stop shop for next generation high fidelity market simulation and algo testing. For the first time, clients can perform fully interactive testing as if it were on the live market, focusing on robust and repeatable performance testing rather than backdated conformance testing. CDS Plus uses the previous day’s tick data from Turquoise, enriched with stylised facts, making use of next generation Agent Based models which can be used to improve algorithm development, testing and benchmarking. 

Turquoise is also collaborating with M-DAQ, a leading global FX specialist, on a new service for investors who, through their brokers, will be able to execute cross-currency securities transactions and settle in their currency of choice (subject to regulatory approval). M-DAQ will contribute its patented product Trading the Right Chart (TRC). This complements well the capabilities of Turquoise, removing the need for multilateral relationships and reduces FX operational risk faced by brokers, delivering further efficiencies to equity capital markets and better outcomes for end investors. 

Appital, the equity capital markets technology solution, and Turquoise have also launched Appital Turquoise BookBuilder. This is the first buyside to buyside bookbuilding platform to give institutional investors the opportunity to proactively source liquidity. By bringing a historically highly manual and opaque process into an automated, electronic platform, they gain control over the entire bookbuilding process. Buyside firms benefit from liquidity discovery and price formation opportunities for illiquid equity positions, as well as the ability to execute large volumes on the regulated Turquoise MTF, often in multiple days’ ADV, with minimal market impact or risk of price erosion. Turquoise also became the first venue to connect to OpenFin in September 2021, offering a direct data feed to the buy-side via its operating system.  

Recently, Turquoise expanded its service with a newly enlarged US segment, which will allow global investors to trade in a greater number of US stocks through one connection, alongside UK, Swiss and European securities. The new offering improves access for investors in Asia and other geographies around the globe. In August 2022, Turquoise also received Recognised Market Operator status from the Monetary Authority of Singapore, enabling firms located in Singapore to apply for TGHL membership and access TGHL trading service. 

The winner will be announced at the Leaders in Trading 2022 gala awards dinner at The Savoy Hotel on 3 November. For table enquiries, please contact Nathan Anacleto.  

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Effective from 1 September, the venue has re-introduced a Standard Tariff which applies to firms that are not part of its proprietary liquidity provision scheme. The Tiered Passive Fees and Tiered Aggressive Fees charge 0 basis points and 0.30 basis points respectively, subject to regulatory non-objection. The system will reward participants more for scale.

Formerly known as ‘maker or taker rebates’, the system was originally designed to reward participants with a fee if they contributed to liquidity by placing an order; and charge them one if they remove it by grabbing one.

LSEG’s Turquoise, along with several other venues, removed the tariffs in 2018 following canvassing from participants who claimed that the tariff system harmed best execution by encouraging firms to execute on the venue with fees that rewarded them the most for their flow.

The new standard tariff will not apply to those participants who opt into the wider Liquidity Incentive Scheme, which includes negative fees for passive flow immediately, growing through monthly value traded thresholds, and reduced tiered aggressive fees above monthly value traded thresholds. The scheme is open to all members but they must opt in and meet 0.5% passive share of trading. For proprietary trading or principal flow only, Turquoise has implemented a negative feed-based incentive and a standard aggressive rate of 0.3 basis points.

Chief executive officer of Turquoise, Robert Barnes, told The TRADE that the re-introduction of the fees as part of its Liquidity Incentive Scheme would encourage more volumes back onto its lit markets.

“Introducing this new fee structure matters because it enables participants to benefit from efficiencies they bring to the market,” Barnes told The TRADE. “The new Turquoise Lit tariffs are very competitive with a focus on quality and a philosophy to share benefits with members contributing to growth. More turnover from a wider diversity of members naturally adds to the quality of multilateral order flow, contributing ultimately to better results on a consistent basis for investors.”

The move is part of a greater three-pronged push to encourage more volumes onto its lit markets: which also includes its recent decision to bolster its testing environment CDS Plus with new technology and its plans to open Turquoise Plato Lit auctions up to retail traders through the addition of a retail flag and market makers towards the end of the year.

The re-introduction, if successful in driving volumes back onto the lit markets, is also likely to have significant implications for the value of Turquoise’s market data, as more bids and offers included on feeds makes them more valuable to the market.

The back story

Originally developed by challenger exchange Chi-X – now part of Cboe – in 2007, the rebate system was designed to change the economics of an exchange by forcing incumbent participants to fork out for any liquidity they were removing from the market. Chi-X’s original concept took 0.3 of a basis point from an order and rebated 0.2 of that back to the participant that had posted that liquidity. By 2010, Chi-X claimed to have grabbed 25% market share excluding the Opening and Closing Auctions on the back of the new rebate system.

“A lot of the investment banks set their algorithms to only ever take liquidity. They will look and see that the stock is cheapest on one exchange and they’ll go and take it. They don’t post bids or offers on exchanges nearly as much as they should,” Tony Mackay, founding chief executive officer at Chi-X Global, told The TRADE.

“The principle [of rebates] was that the people who were sucking liquidity out of the system should essentially pay for the liquidity that is provided by a market maker. Before, it was opaque, and you could never work out how much a market maker was making with our system.”

Chi-X’s launch was swiftly followed by similar concepts brought to market by BATS Global, Nasdaq, SIX and Eurex. Variations of a model that rewards traders for volumes are still championed today at Cboe Global Markets and pan-European exchange Aquis.

Payment for order flow

However, the rebate system has repeatedly suffered from being confused with concepts such as payment for order flow (PFOF) – an increasingly taboo practice across global markets.

Many argue that the rebate system creates sub-optimal behaviour, encouraging participants to chase better fees, as opposed to best execution. This argument is not dissimilar from the one made against PFOF: that claim that the practice rewards certain market makers with vast amounts of retail flow in exchange for being the highest bidder as opposed to having the best execution.

“It’s important to understand that when the prices were being posted on our market, they were then available for anyone in that market to interact with,” added Mackay.  “It wasn’t like the retail payment for order flow where it was just between one market maker and the clients of that brokerage.”

Renewed optimism

With the change in circumstances around the regulation of best execution, however, Turquoise hopes that the resumption of the tariff conditions will improve its lit volumes across Europe – a key objective of LSEG over the coming year.

Given that following its removal in 2018, Turquoise lot orders declined by an estimated 50% in 2019, its impact could be significant when it comes to the exchange’s pan-European ambitions.

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