Chi-X to Waive Market Data Charges

Chi-X, the new Instinet-owned trading venue, will distribute its market data free of charge to vendors and customers when the new trade execution venue launches in the first quarter of next year, say company officials.

Chi-X is currently in live testing, with Instinet already routing customer orders to the new platform, which will initially trade liquid stocks from Germany, the Netherlands and London. Data will be made available via the ITCH protocol, which is also used by Nasdaq, to distribute the exchange's data, and will be distributed via Reuters, Bloomberg, GL Trade and Chi-X's own Web site.

"It's a soft launch. Chi-X is regulated as an MTF and already operational, but trades are all coming through our own broker. We'd expect a full launch in Q1 of next year," says Peter Randall, managing director of Chi-X in London.

"We've launched several markets in the US. What we found… is that the best way is a phased approach," adds Instinet co-president John Fay.

The development effort to incorporate Chi-X data was not a major one for Reuters, officials say. "Reuters has had a strong relationship with Instinet for many years, and we will use the same technology to collect data from Chi-X, so very little additional effort was required by us," says Paul Bowes, head of exchange strategy for the vendor.

"Reuters aims to provide exchange data to our clients in the most cost-effective manner. If an exchange charges a fee for their data, then unfortunately we have to pass that cost on to our clients. If Instinet does not charge, then we will clearly not pass a fee on to end-users," adds Bowes.

GL Trade officials confirm that the vendor will be one of the first to offer data from Chi-X over its GL Net broker network. "We have two offers; the first is the data offering carrying the Chi-X market data feed. The other is offering it as an execution destination," says Philippe Carré, managing director client services, marketing and communications for GL Trade. "We're talking to a number of parties to provide that service to existing GL users," he adds.

The vendor expects to be ready with both offerings when Chi-X launches, says Carré. "We intend to deliver Chi-X as a service in the same way that we're delivering stock exchange access and we intend to continue expanding," says Carré.

Other vendors are following suit in expanding their connectivity to new markets. Simon Barnby, global director of marketing communications at Royalblue, says the vendor will have completed development to Chi-X "at or around the live date," though the timeframe will ultimately depend on client demand—while Colm Furlong, equity specialist for SunGard's Front Arena, says that the vendor will consider carrying data from "any venue that clients are interested in, but it's a case of where the liquidity will be." Deals with trading platform vendors can help new trading venues gain traction by establishing a distribution network more rapidly, Furlong adds.