Adding MTFs to the Endangered Species List
![robdaly-headshot robdaly-headshot](/sites/default/files/styles/landscape_750_463/public/import/IMG/762/101762/robdaly-headshot-580x358.png.webp?itok=vDU7KFE5)
Europe is about to lose another independent multilateral trading facility (MTF) as Nordic MTF Burgundy prepares to become a regulated exchange.
Given that the London Stock Exchange (LSE) bought Turquoise, and Bats Global Markets is looking to purchase Chi-X Europe, the number of free-standing equities MTFs is dropping precipitously. Off the top of my head, this will leave Bats and a few smaller players like Equiduct and Quote MTF to go head-to-head with the exchanges.
The big question is what Bats will do with Chi-X if the deal goes through. It could be about purchasing market share, technology or the goodwill of the Chi-X investors. A union of the two MTFs could represent 38 percent of UK FTSE 100 trading, and 22 percent of European volume excluding the UK, so the market share argument holds water. If Bats can maintain that volume, it can easily cover its operating nut. However, if it decides to shut down Chi-X, then those market share numbers will certainly go down. Bats isn’t a stranger to operating two quotes in the same market. It has been using that model in the US quite successfully.
The idea that Bats is acquiring Chi-X for its technology isn’t a strong argument. Bats has never been one to acquire third-party technology that it can develop internally. If the deal goes through, moving Chi-X on to the Bats platform would likely be the highest priority for Bats.
Finally, considering how expensive it is to operate an MTF and the current trend of market consolidation, this would be a practical time for Chi-X investors to cash out their positions and invest the profits elsewhere. The deal seems to be a win-win for both parties if the price is right.
Disagree? Send me your thoughts at rob.daly@incisivemeida.com.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
Ace high or busted flush? Digital Asset’s mixed fortunes mirror DLT adversity
The vendor hoped to remodel post-trade using blockchain technology—and it still might—but its bumpy progress raises questions over the future of DLT in finance.
This Week: BlackRock/Preqin, Trading Technologies, FIA Tech and more
A summary of some of the past week’s financial technology news.
Adaptive’s Aeron goes live on Microsoft Azure Marketplace
The messaging software used for building bespoke trading platforms is now available on Microsoft’s marketplace, making it accessible through major cloud providers.
Bloomberg, industry bodies push back on Cboe’s proposed OEMS rule change
Some industry bodies disagree with the options exchange’s proposal to carve its Silexx OEMS out of the SEC’s definition of an exchange facility and place it into a separate business line.
Waters Wrap: CME, Google and the pursuit of ultra-low-latency trading
CME Group and Google have announced Aurora, Illinois, as the location for the exchange’s new co-location facility. Anthony explains why this is more than just the next phase of the two companies’ originally announced project.
WatersTechnology latest edition
Check out our latest edition, plus more than 12 years of our best content.
Natixis refines in-house interoperability model
The French asset manager has refined its canonical data model over the last decade, as the interoperability movement continues to evolve.
Zeros and ones: Industry contemplates T+0 as the next step
With the North American transition to T+1 settlement complete, same-day settlement could be the next goalpost set, though skeptics are many.