Despite launching in the midst of a global financial crisis, pan-European trading platform Nasdaq OMX Europe has got off to a good start since it opened its doors on 26 September, according to Charlotte Crosswell, the platform’s president.
“The last few days have been crazy for everybody,” she told theTRADEnews.com. “A couple of customers put off testing until the end of the week, but that was to be expected. Everybody is very keen on getting connected – it’s just finding the right time to do it amongst the market turmoil.”
Overall, Crosswell has been pleasantly surprised by the number of firms willing to connect to Nasdaq OMX Europe. “Over the next two weeks we have got a fairly heavy pipeline of companies certifying with us,” she said. “When you launch in difficult market conditions, you do get slightly concerned that it will put everything on hold. It hasn’t – it has just caused us a few days’ delay here and there.”
Around 40 customers are either live or in the process of connecting to Nasdaq OMX Europe.
Although brokers may have been distracted by recent events, their heavy losses have brought the need to cut trading costs and improve efficiency into sharper focus.
“Participants recognise that MTFs are going to bring down trading fees,” said Crosswell. “From that point of view, even if people have put connection off by a few days, it hasn’t stopped their overall desire to get connected as soon as they can.”
Having signed up several large brokers to use its core matching engine, Nasdaq OMX Europe is now switching to phase two: building up its customer base of small-to-mid-sized brokers who want to use the platform’s pan-European onward routing facility. This is one of the MTF’s main selling points, along with its peak round-trip latency of 250 microseconds.
“Initially we focused on getting customers connected to our matching engine to get liquidity into the order book,” said Crosswell. “We now need to really focus on the routing customers as well. We will be doing that over the next month.”
As well as continuing to add countries and stocks in its build-up to full launch at the end of October, Nasdaq OMX Europe is also looking to finalise dates to start trading in Italy, Spain and Switzerland. “That’s going to be high up the list of priorities, especially as it now looks like Italy is going to be open for trading on 13 October,” said Crosswell.
The company is also participating with fellow MTFs in an initiative to improve pre- and post-trade transparency in Europe by creating a ‘consolidated tape’ of pricing trade data. The need for such a tape was highlighted on 8 September when the London Stock Exchange (LSE) suffered a seven-hour outage. Volume did not shift onto MTFs as expected because many firms were reluctant to trade without price information from the primary exchange. In the US, traders use that market’s consolidated tape as a source of pricing data, so a single exchange going down does not halt trading.
“We will certainly participate on those discussions over the next few weeks and hopefully come to an agreement that goes some way to giving the market what it needs,” said Crosswell. “There is a way to go yet but it is heading in the right direction. As soon as you get the consolidated tape it really does open up competition.”