November 16, 2010 / 2:49 PM / 9 years ago

LSE hires manager to lure high-frequency flow

* LSE hires in expertise to support HFTs

* The exchange wants to reverse market share slide

* HFTs account for a quarter of European trading

By Luke Jeffs

LONDON, Nov 16 (Reuters) - The London Stock Exchange (LSE.L), which is losing market share to low-cost rivals, has hired a technology specialist to attract business from controversial high-frequency trading (HFT) firms.

The LSE is keen to attract more flow from HFTs in a bid to claw back business lost to rivals such as Chi-X Europe and Bats Europe, that have grown quickly off the back of high-volume trading firms.

The UK exchange has hired Audrey Faveeuw as a business development manager reporting to Pinar Emirdag, the LSE’s head of business development since her appointment in July.

Faveeuw, who joined the exchange from technology firm Atrium Network, is charged with building relationships with Europe’s elite high-frequency trading firms (HFTs).

“Audrey has a strong track record of City experience, including a number of key business development roles,” Emirdag said in an emailed statement late on Monday.

The LSE’s share of UK equity trading has fallen to 51.2 percent so far this month, compared to 95.8 percent at the start of 2008, according to data from Thomson Reuters.

The UK exchange had planned to upgrade this month the technology behind its main UK order book to make it more attractive to HFTs.

But the LSE postponed the switch until next year after it launched on Nov. 2 an investigation into “suspicious circumstances” after its European share trading system Turquoise crashed for two hours that morning.

Turquoise has been trading normally since Nov. 2 and the investigation is ongoing, a spokesman said.

HFTs, typically computer driven hedge funds, have grown rapidly in Europe since the European Commission’s Mifid trading reforms took effect in 2007.

But the HFTs, which are estimated by consultancy Aite Group to account for a quarter of European trades, have drawn criticism as their activities have grown.

European regulators have expressed concerns that huge volumes of trades are being handled by a handful of thinly capitalised and lightly regulated firms, and questioned whether new rules should be introduced to control these firms. [ID:nLDE68T0F3]

The LSE reports on Thursday its financial performance for the six months to the end of September. The exchange will report flat revenues of 310.6 million pounds ($500.4 million), according to the consensus forecast in Thomson Reuters I/B/E/S estimates.

Editing by Elaine Hardcastle

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