Financial Regulatory Forum

LSE to join banks to operate Turquoise platform

By Reuters Staff
February 1, 2010

LONDON, Feb 1 (Reuters) – The London Stock Exchange will join forces with banks to operate alternative trading venue Turquoise, the exchange’s chief executive said on Monday.

“The London Stock Exchange will be shortly launching an initiative, a cooperative partnership between wholesale market participants and the exchange under the name of Turquoise,” LSE Chief Executive Xavier Rolet said.

It will handle both “lit” order book and “dark” or anonymous trading within the same regulated venue, Rolet said.

The LSE’s planned “dark pool” Baikal is being merged with Turquoise, Rolet told an industry event.

“We will offer an exchange operated multilateral trading facility with full MiFID transparency,” Rolet added, referring to a set of EU rules that oversee securities trading.

MiFID was introduced in November 2007 to tear down barriers to cross-border share trading and has spawned a series of new trading venues to compete with exchanges.

Rolet said he expects consolidation among exchanges and new upstarts.

Turquoise was originally launched by a group of investment banks and succeeded in forcing the LSE to cut its tariffs in a bid to stop erosion of market share.

Turquoise put itself up for sale last year and the LSE won exclusive right to negotiate with it.

The exchanges industry in Europe is trying to persuade regulators to impose heavier transparency rules on dark pools.

The LSE, the region’s biggest share trading market, has opted to follow a different strategy by working with its biggest customers, the banks, who provide the bulk of liquidity to the market. (Reporting by Huw Jones, Editing by Hans Peters) ((Reuters messaging: huw.jones.reuters.com@reuters.net; + 44 207 542 3326; huw.jones@thomsonreuters.com))

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