ZURICH (Reuters) - Europe's bourses will ride out the rise of an army of new low-cost rivals, the head of SWX Europe said, though they are facing many of the same challenges as their U.S. counterparts.
The London-based trading platform -- owned by Switzerland's SWX stock exchange operator -- is looking at its next moves to stave off competition after cutting tariffs by 22 percent since the beginning of 2007, the head of the venture said.
"We have a very full execution pipeline, but we are looking carefully at what moves we might make next," Lee Hodgkinson told Reuters in an interview on Wednesday.
"I do think the industry should expect further innovation from SWX Europe. We must be continuously dissatisfied with the status quo," he said.
Rising dissatisfaction from hedge funds with traditional stock exchanges and new European regulation has sparked the birth of an entire generation of alternative trading venues, which are aggressively trying to steal market share.
SWX Europe is setting up a so-called dark pool off-exchange trading service for Swiss blue chips with U.S. broker NYFIX Inc (NYFX.O: Quote, Profile, Research, Stock Buzz), which provides trading technology.
Preparations for the venture, to start by the middle of the year, were on track, Hodgkinson said.
And SWX Europe, formerly called virt-x, was also ramping up the speed and capacity of its trading systems.
In the United States, the New York Stock Exchange NYSE.N NYSE.PA has seen its market share fall sharply, but Hodgkinson said stock exchanges were here to stay.
"There's been a lot of debate in the media that has suggested the demise of the exchanges, and I think the demise of the exchanges has been greatly exaggerated," he said.
"There is no reason why the exchanges can't continue to be substantial venues of liquidity in the years ahead."
WHAT NEXT?
SWX Europe might want to attract more trading in European blue chips as the next step to fight the new rivals. So far it is largely trading Swiss blue chips, even though it was originally set up as a pan-European forum.
"We're looking at a range of growth opportunities, which includes our pan-European service ... Clearly having a recognized investment exchange in London provides us with some interesting strategic options," Hodgkinson said.
He explicitly ruled out being in talks with any of the new rivals in London to provide trading technology or other services, including Turquoise, a pan-European share-trading venture backed by nine investment banks. Continued...
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