Turquoise
| Turquoise | |
| |
| Founded | 2008 |
|---|---|
| Headquarters | London |
| Key People | David Lester, CEO |
| Products | European equities trading platform |
| Corporate Website | tradeturquoise.com |
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. It was acquired by the London Stock Exchange, a former rival, in February of 2010.[1] [2]
In June 2010, Turquoise’s mid-point only dark book traded €4.305 billion, becoming the top European dark pool for the first time on a monthly basis. Turquoise narrowly beat Chi-Delta, the dark MTF operated by Chi-X Europe, which traded €4.3 billion.
Some market observers credit increased buy-side interest in Turquoise to a Themis Trading white paper titled "Data Theft on Wall Street," released in May 2010. The paper suggested that high-speed data feeds from US exchanges including BATS Exchange and Nasdaq OMX reveal information about hidden order flow, such as buy and sell indicators and cumulative executions of hidden orders, which could be exploited by high-frequency traders. Turquoise issued a response offering assurances that its data feeds do not contain potentially sensitive execution information. The next day, trading on the European dark pools operated by Chi-X and BATS Europe fell, with some sell-side firms reporting that they had stopped routing orders to these pools altogether. Turquoise dark pool volume more than doubled that day.[3]
Contents |
Products and Services
On April 21, 2010, the London Stock Exchange said Turquoise would go live on a new Linux-based platform in August or September of 2010. It will move away from the Cinnober Tradexpress platform, which is Java based, and migrate to the MillenniumIT platform, based on Linux and Sun Solaris Unix environments.[4]
On April 14, 2010, Turquoise unveiled plans to launch trading in U.S. shares including Citigroup, Apple and Alcoa.[5]
In May 2009, Turquoise announced TQ Channel, a new service that aggregated large orders and routes them out to other trading venues. The service was designed to combat increasing fragmentation in European equity markets. It will provide a single point of access to dark pools operated by banks and specialist brokers for its members. It is set to launch in early July 2009.[6]
Background
Turquoise was announced by an initial consortium of seven banks that together account for half of share trading in Europe. The aim was to create 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.[7]
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.
The Turquoise venture was first outlined in November 2006, nearly a year behind schedule, with the platform expected to become fully operational Sept. 5, 2008. The pace of development has seen it nicknamed "Project Tortoise" by some. The exchange received regulatory approval in July 2008 to operate its pan-European trading platform.[8]
The consortium selected Cinnober Financial Technology in October 2007, as its technology provider. This Swedish technology provider, founded by former executives at OMX and SEB (a leading Swedish bank), built MarkitBOAT, the trade reporting system backed by many of the same investment banks that were 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.[9] 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.[10] In all, 15 firms have gained approval as clearing participants, including Turquoise's nine founding members, plus ABN Amro, Barclays Capital, Credit Agricole Cheuvreux, Instinet, KAS Bank and Lehman Brothers. [11]
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.[12] The initial setbacks didn't have a great impact on the project's overall success. The new MTF in Europe was launched quickly after the appointments of Eli Lederman as MD and Cinnober as technology provider.
Turquoise began limited operations at 8 a.m. in London Aug. 15, 2008.[13] Eli Lederman, a managing director at Morgan Stanley responsible for overseeing electronic trading systems in New York and London, was appointed as chief executive.[14]
Financials
In early August 2010, CEO David Lester told the Financial Times that better-than-expected dark pool trading revenues meant the exchange was closer to turning a profit than previously thought. Asked by the FT when Turquoise would be profitable, Lester said: "I would say we are about just under half way there."[15]
Key People
- David Lester, CEO
References
- ↑ LSE Unveils Turquoise Acquisition. Press Association.
- ↑ Former Turquoise chief Eli Lederman sues LSE. The Telegraph (UK).
- ↑ Big swing as Turquoise tops monthly dark trading for first time. The Trade News.
- ↑ London Stock Exchange readies Turquoise for Linux migration. ComputerWorld UK.
- ↑ European trading platforms to offer US stocks. The Financial Times.
- ↑ Turquoise moves to link up ‘dark pool’ liquidity. The Financial Times.
- ↑ Exchanges appear ready to go over to the dark side. Financial Times.
- ↑ Turquoise Granted FSA Approval. Advanced Trading.
- ↑ DTCC to handle clearing for Turquoise. Financial Times.
- ↑ Turquoise clearer names chief. Financial Times.
- ↑ EuroCCP to Launch Clearing & Settlement System Friday. Wall Street & Technology.
- ↑ Plus pulls out of a merger with Turquoise. Financial Times.
- ↑ Turquoise Opens Doors. SecuritiesIndustry.com.
- ↑ Turquoise appoints chief from Morgan Stanley. Financial Times.
- ↑ LSE’s Turquoise heading into profit. Financial Times.
