Quote MTF, a pan-European multilateral trading facility (MTF), has signed agreements with eight passive liquidity providers that will supply flow to the platform in return for an equity stake.
The MTF offered a total of 40% equity in return for liquidity provision. Liquidity providers each receive an upfront stake and will then compete for the remaining portion of equity based on the flow they provide. Agreements will come into effect from 4 April 2011.
The confirmed participants will bring directional and arbitrage trading strategies from the investment banking and principal trading sectors, drawn from the US, UK, Ireland, France and the Netherlands.
Christian Bower, commercial director, Quote MTF, said, “Significant liquidity will be made increasingly available from the beginning of Q2 2011 which will compel liquidity takers, and those firms that need to adhere to best execution policies, to connect and start interacting on the platform. Market participants can monitor and analyse the liquidity through connected market data vendors. We are aiming to secure a 5-6% market share in pan-European equities.”
Bower believes that his platform's average daily value traded will begin at €1.14 billion soon after the agreements come into effect and will exceed €2-3 billion by the end of 2012.
The MTF has also reaffirmed a ”no fee, no rebate' model for passive trading in a bid to promote price discrimination for improved trading opportunities. Quote MTF has also confirmed that it will continue to cap exchange fees at €14,000 until 2012.
Bower adds: “The recent outbreak of mergers between global exchanges will unleash further pressure for a sustained number of lit platforms to keep user costs competitive. Quote MTF's efficient business model, with its operations hosted at the Interxion data centre in the City of London, and clearing all trades through the European Multilateral Clearing Facility, will ensure that we can pass these savings straight on to the end user; our exchange fees sit at a floor breaking 0.14bps for taking liquidity.”
Quote MTF and its ThymeX matching engine, which is already used by Canadian alternative trading system Omega ATS, is a fast, resilient and highly scalable trading environment and the MTF claims to require only a fraction of Europe's liquidity for the company to break even.