NYSE Euronext, BNP, HSBC Unveil Share-Trading Plan
LONDON (Reuters) - NYSE Euronext, BNP Paribas and HSBC unveiled plans on Wednesday for a new alternative share trading system due to go live by mid-2008, rivalling a delayed venture backed by another group of investment banks.
Project SmartPool, the first alternative trading venture designed for large blocks of shares announced by an exchange in Europe, comes as new EU rules on securities trading, the Markets in Financial Instruments Directive (MiFID), are set to take effect on Nov. 1.
Meanwhile, Project Turquoise, a share-trading platform under development by seven of the world's biggest investment banks, is ready to reveal within weeks its chief executive, technology provider and other members, people close to the matter said.
Project Turquoise originally hoped to launch its trading platform by the end of 2007, but that date has been pushed back to at least April next year.
Some industry watchers said the NYSE Euronext-led project has a better chance than Turquoise as it can build on the existing infrastructure that takes a long time to create.
"For Turquoise, everything has to be built -- the technology, the governance, the network, the client," said a banker who follows the sector.
NYSE Euronext (NYX.N)(NYX.PA), the top exchange in Europe in terms of market capitalization of listed companies, expects that MiFID will trigger growth in "dark liquidity pools," creating room for alternative trading platforms.
Unlike a traditional exchange, Project SmartPool will allow users to trade without disclosing their identity or the size or price, facilitating the dark liquidity pools.
Alternative block trading platforms in the United States already handle 4.5 percent of the trading volume, according to research firm Aite Group. That share could grow to at least 15 percent in three years' time, according to financial markets research firm TABB Group.
"We would welcome further banks who are interested in participating with us in this exciting new project," Roland Bellegarde, head of European cash markets and member of the NYSE Euronext management committee, said in a statement.
NYSE Euronext, which will run the new block trading platform, will hold a majority stake in the joint venture with HSBC (HSBA.L)(0005.HK) and BNP Paribas (BNPP.PA).
Project Turquoise is a rival plan by some of the world's biggest investment banks to confront established exchanges.
Project Turquoise, which was announced in November 2006, is backed by U.S. -based Citigroup (C.N), Goldman Sachs (GS.N), Merrill Lynch MER.N and Morgan Stanley (MS.N); Switzerland's UBS (UBSN.VX) and Credit Suisse (CSGN.VX); and Germany's Deutsche Bank (DBKGn.DE). BNP Paribas is a junior partner.
NYSE Euronext said SmartPool will build on its existing technology and infrastructure. This will allow its clients to use the new platform as soon as it launches.
Clearing and settlements will be handled by an external party, NYSE Euronext said.
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