| Following NASDAQ's formal abandonment of it attempted acquisition of the London Stock Exchange (LSE), European national exchanges - the regulated markets in MiFID terms – are facing increased pressure as new alternative trading systems (ATS) appear.
Yesterday, ITG launched POSIT Now, a continuous intraday crossing system for equities. POSIT was the first regulated alternative trading systems (ATS) in Europe and, in November this year, will become a multilateral trading facility (MTF) in MiFID terms. POSIT Now will complement ITG's existing crossing POSIT Match system, which offers a dark (anonymous and not displayed in order books) pool of liquidity in which to match buy and sell orders.
Alasdair Haynes, ITG European CEO, said “We expect POSIT to benefit from the implementation of MiFID and its requirement for market participants to investigate all sources of liquidity to ensure Best Execution. I am certain that POSIT Now will soon establish itself as an important source of dark liquidity that can't be ignored.”
Belinda Keheyan, Head of International Marketing for ITG, also said “The two benefits are midpoint pricing and no market impact because our system is anonymous so it’s confidential which means you don’t know who is in the market. You don’t even know they’re in the market”.
Other US ATS operators are also developing MiFID capability. In January, Instinet launched Chi-X which trades 7,500 European equities and which will become an MTF. Liquidnet, one of ITG’s main US competitors, is also expanding in Europe and has acquired an algorithmic trading provider, Miletus Trading, to provide quantitative strategies for European equities.
Last year Equiduct announced that it will launch a MiFID-ready exchange facility in Q2 2007. This will be based on an updated version of the old NASDAQ Europe systems. Earlier in February, Nasdaq indicated that it was in talks with Project Turquoise – a consortium of investment banks reported to be forming an electronic trading platform which will compete with the LSE. According to reports, Nasdaq has offered to license its INET technology to Turquoise – but will continue to hold the 29% stake in the LSE.
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