Project Turquoise

From MarketsWiki

Project Turquoise (also called only "Turquoise") is a European equities trading platform for on-exchange and off-exchange execution, backed by investment banks in an effort to cut transaction fees from established venues. The venture was first outlined in November 2006 – the pace of development has seen it nicknamed Project Tortoise by some – and is nearly a year behind schedule, with the platform expected to become fully operational Sept. 5, 2008. The exchange received regulatory approval in July 2008 to operate its pan-European trading platform.^[1]

Turquoise began limited operations at 8 a.m. in London Aug. 15, 2008.^[2]

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Project Turquoise was announced by an initial consortium of seven banks – two more have since joined – which together account for half of share trading in Europe. The aim was a platform which would halve on-exchange trading costs, but the venture has been expanded to include dealing in dark liquidity pools, where firms offer to buy and sell large blocks of shares away from public sight^[3].

The seven original backers - Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS, were joined by BNP Paribas and Société Générale.

Eli Lederman, a managing director at Morgan Stanley responsible for overseeing electronic trading systems in New York and London, was appointed as chief executive.^[4]

The consortium selected Cinnober Financial Technology, as its technology provider. The group, staffed by former executives at OMX, built BOAT, the trade reporting system backed by many of the same investment banks that are driving the Turquoise project. Turquoise is looking at a tariff pricing model that has become the basis for the fiercely competitive U.S. market, known as the "maker-taker" model.

European Central Counterparty Limited (EuroCCP). a subsidiary of the U.S. clearing and settlement house, Depository Trust & Clearing Corporation, was formed especially for Turquoise. Initially, it will clear trades in 14 countries using seven different currencies.^[5]. It is headed by Diana Chan, formerly managing director for market strategy in global transaction services at Citi. Trevor Spanner, the former head of transaction and custody services at Merrill Lynch and a former board member at what was London Clearing House, is COO.^[6] In all, 15 firms have gained approval as clearing participants. Other than the firm's founding members, ABN Amro, Barclays Capital, Credit Agricole Cheuvreux, Instinet, KAS Bank and Lehman Brothers are in the mix. ^[7]

The expansion of the platform’s aims led to initial delays, as did the selection of management and the technology provider. A further setback came in October 2007 when it dropped plans to merge with Plus Markets, a London-based exchange that caters to small companies which would have provided Turquoise with a listing.^[8]