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Wacky Races

Just when we thought that the European Liquidity Race was possibly entering the final lap, there is a slew of new announcements and further incentives. Firstly, NEURO has announced that participants on its MTF will be entitled to purchase up to 1.3 million shares of common stock in NASDAQ OMX group, “provided they meet specified market share thresholds”. An unrelated report in the FT today cited Moody’s as saying that NASDAQ OMX was “maybe the best placed to cope” in the face of the economic climate. So, on the face of it, it looks like this incentive could be an interesting move, especially given NEURO’s already low fee structure.

Yesterday also saw the announcement of a new fee structure from Turquoise. Perhaps more interesting though, is Eli Lederman’s assertion that the shift to new venues “doesn’t have to be gradual – and shouldn’t be”, and so the new Turquoise rebate scheme is aimed at doing exactly that – to “focus people’s attention on the opportunity before them”.

Chi-X, meanwhile, has been busy celebrating its 2nd birthday with the announcement that it “constantly ranks within the top five European equity trading venues by value traded on order book”. Looking at the numbers, it certainly does seem to consistently outrank the other alternative venues (and now some European primaries) both in volume traded and market share. I wonder at what point, though, it becomes part of the establishment rather than one of the newcomers?

Creeping up on the outside is BATS, which had a good week last week pretty much matching Turquoise for volume on most indices. Since its launch, BATS has taken a pretty consistent approach which has put it in a good position (although it still trades less than a quarter of Chi-X’s volumes).

As a backdrop to all this, the FFI on all major indices rose last week indicating that the appetite to trade on new venues persists, although traders still seem unsure which of the venues to choose from. With more venues still to launch, it looks like their choice is going to get harder rather than easier.

So, as the participants approach the next corner, it will be fascinating to see what skills they employ in their bid for glory in the Race for European Liquidity!

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