| April 29
April 29 Pan-European trading platform Equiduct
has found new strategic investors and revamped its business
structure, cutting costs, raising prices, and moving to a
mutualized model where it is owned and controlled by its main
Equiduct said on Monday that France-based companies BNP
Paribas Securities Services and Viel Group, as well as
Belgium-based KBC and London-based market maker
Winterflood, have joined Knight Capital Group and Borse
Berlin in the new ownership structure.
The terms of the deal were not disclosed.
Hedge fund Citadel LLC, which also has a market making
operation, had until recently been one of Equiduct's top
investors, but pulled its backing as the platform had not gained
as much traction among retail trading firms as had been
expected, throwing Equiduct's future into doubt.
Equiduct went live in 2007 after European regulation opened
the market to competition. The plan was to quickly build market
share by offering steep trading discounts as compared to
established exchanges, like those run by NYSE Euronext.
But its market share of European equities peaked at just over 1
percent and in the past six months has been in the 0.6 percent
to 0.8 percent range.
Equiduct Interim Chief Executive Artur Fischer, who took the
job in February when CEO Peter Randall stepped down, said
breaking even had replaced building market share in the near
term as a primary goal, though he would not comment on how much
money the company had lost.
"If we focus on a service that is excellent at price which
is low enough that people want it and high enough that it pays
our costs - if we can achieve that, market share will follow
automatically," Fischer said in an interview.
Since February, Equiduct has cut its costs by 25 percent
while also reaching an agreement with its customers/owners to
raise its trading fees by up to 20 percent, he said, adding that
the company's fees are still lower than competitors' prices.
Fischer is also joint CEO of Borse Berlin, which runs
Under the new structure, no single stakeholder owns more
than 25 percent of the Equiduct, which is aims its services at
retail brokerage firms.
Jersey City, New Jersey-based firm Knight took a position in
Equiduct in June 2010. A key challenge for new exchanges is
attracting sufficient liquidity to attract new traders. Knight
is one of the top liquidity providers in the U.S. market and its
relationship with Equiduct gives it ready access to European
retail brokerage firms.
"We see the European market as changing," Albert Maasland,
CEO of Knight Capital Europe said in an interview. "Volumes are
low, it's a tough retail environment, and Equiduct provides
value in that environment," he said as to why Knight has
maintained its investment in the trading venue.
Virtu Financial and Winterflood Securities also act as
market makers on Equiduct.
Competition among multilateral trading facilities (MTFs) has
been fierce in recent years since pan-European regulation opened
the market to competition in 2007.
A lack of funds led to the closing of Spain's Plataforma
Alternativa de Valores Espanoles last year in February, while
Nasdaq OMX Group shuttered a pan-European MTF it
operated, called Neuro, in April 2010 as the business failed to
gain enough market share.