By Daisy Ku
LONDON (Reuters) - Turquoise, a pan-European share-trading venture backed by nine investment banks, expects European exchanges to lose almost half of their market share in trading as new entrants mushroom.
Turquoise, which will launch over a three-week period between August and September, aims to take 5 percent of the market in the first three months.
"In a year's time I would think that the incumbent exchanges are on the order of 40 or 50 percent of the market, the rest of it divided among the new entrants," Chief Executive Officer Eli Lederman told the Reuters Exchanges and Trading Summit.
In the United States, which analysts refer to as the worst-case scenario for European incumbents, the New York Stock Exchange (NYX.N: Quote, Profile, Research, Stock Buzz)NYSE.PA has seen its market share of NYSE-listed stocks fall to around 50 percent from more than 80 percent in 2005.
In Britain, alternative equity trading platform Chi-X Europe gained about 10 percent of the daily total volume of trading of FTSE blue-chips in its first year. It hopes for a 25 percent trading share of London blue chips in a year's time.
Nasdaq OMX Pan-European Market, a new trading platform to be launched in September by Nasdaq OMX Group Inc (NDAQ.O: Quote, Profile, Research, Stock Buzz), also targets a 5 percent market share in the first year and a 20 percent share in the long run.
Turquoise, which will offer a hybrid trading facility combining a traditional transparent order book and dark liquidity pools, hopes to challenge Europe's incumbents such as the London Stock Exchange (LSE.L: Quote, Profile, Research, Stock Buzz), Euronext (NYX.N: Quote, Profile, Research, Stock Buzz)(NYX.PA: Quote, Profile, Research, Stock Buzz) and the Deutsche Boerse (DB1Gn.DE: Quote, Profile, Research, Stock Buzz) with a competitive tariff structure.
In the displayed order book, Turquoise will have a taker-maker model -- charging 0.35 basis points of the transaction amount to its customers to take liquidity, or sell shares, and rewarding 0.15 basis points for liquidity added, or buy shares, according to Lederman. Continued...
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