Equiduct: evolutionary leapfrog
Euro Millennium: exporting US expertise
Of all the MTFs planning to launch in 2008, probably none will be more closely watched than Turquoise, the venture backed by a consortium of nine leading investment banks: BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Société Générale and UBS.
Although it looked for some time as if Tortoise might be a more apt name than Turquoise, given the project’s slow start, the transformation of the consortium into a private company and the appointment of a chief executive have added some vigour.
Turquoise plans to build a high-speed, high-capacity open order book system that’s tightly integrated with a separate anonymous, non-displayed dark pool. Clearing and settlement will be taken care of by DTCC’s EuroCCP. EuroCCP will be connected to various CSDs in different countries through Citi for settlement.
Turquoise believes that the market clout of its financial backers, which collectively account for more than half of all equity trading in Europe, will give it an advantage over other MTFs. Just how much of an advantage, however, remains unclear. Although Turquoise’s investment bank sponsors might be able to preference some of their proprietary trading and market-making flow to the platform, client orders will have to be routed to wherever the best prices are to be found if the banks want to preserve some pretence of best execution.