Nasdaq eyes 20 pct of European trading
LONDON (Reuters) - Nasdaq OMX Group Inc (NDAQ.O), which will launch a pan-European trading platform in September, targets 5 percent of trading in European blue-chips in the first year and sees that growing to 20 percent in the long run, said the new platform's leader.
Nasdaq OMX hopes to take market share from both incumbent exchanges and multilateral trading facilities (MTFs), such as Chi-X Europe and Turquoise, with its high-speed trading engine and a competitive total cost of trading.
The Nasdaq OMX Pan-European Market, which will run along with Nordic and Baltic stock exchange operator OMX's existing trading venues, will also be the first trading venture to offer order routing based on the best bid offer in Europe, although there is no such requirement under MiFID, the new European Union trading rules.
"I think there is absolutely room for new entrants. It will take awhile for the market to sort things out to find anywhere from four to five large markets," Christopher Concannon, the newly appointed head of Nasdaq OMX's pan-European market, told the Reuters Global Exchanges and Trading Summit.
"Clearing and settlement is a critical matter," he added.
The transatlantic exchange group will pick its clearing partner this month, counting Fortis (FOR.AS) (FOR.BR), European Central Counterparty Ltd, SIS x-clear and LCH.Clearnet Group as candidates.
It is yet to announce its trading fees, but said the model will be similar to that of Chi-X Europe.
"Pricing will be extremely competitive," said Concannon, who joined Nasdaq in 2003 as executive vice president.
Analysts expect Nasdaq OMX to incur losses during the start-up phase as it routes trades to other liquidity pools at a discount and rewards liquidity providers.
But they also expect the low-cost platform, which involves a staff of just about 20, will only need a small market share to become profitable.
Turquoise, a pan-European trading venture backed by nine of the world's biggest investment banks, expects European exchanges such as the London Stock Exchange (LSE.L), NYSE Euronext's (NYX.N) (NYX.PA) Euronext and Deutsche Boerse (DB1Gn.DE) to lose half of their market share in a year's time.
(Editing by Gerald E. McCormick)
