UPDATE:NYSE Euronext To Launch Europe Dark Pool Platform Feb 2
January 28 2009 - 4:26PM
Dow Jones News
NYSE Euronext (NYX) said Wednesday it would launch its European
platform for so-called "dark pool" trading Feb. 2 after securing
approval from the U.K.'s financial regulator.
The bank-backed SmartPool platform had been slated for launch
last June, but exchange officials said it was pushed back in
response to changing market infrastructure.
The transatlantic exchange operator is competing with London
Stock Exchange Group PLC (LSE.LN) in Europe to tap the fast-growing
dark pool market.
Dark pools are private markets in which buyers and sellers
connect and trade large blocks of equities anonymously.
U.S.-based brokerage Knight Capital Group (NITE) and Pipeline, a
dark pool operator based in New York, also aim to launch European
platforms this year.
Despite the high-profile players targeting the market, dark
pools continue to represent a fraction of overall European equities
trading. Late 2008 estimates put dark pools' market share at less
than 1% of executed trades.
Yvette Roozenbeek, acting chief executive of SmartPool, on
Wednesday downplayed expectations as the platform prepares to
launch next week.
"We plan a controlled and phased roll-out of markets and expect
volumes to develop over time, particularly in current market
conditions," she said in a statement.
SmartPool will begin trading about 1,000 stocks from 15 European
markets. London-based LCH.Clearnet will clear Euronext-listed
stocks, with EuroCCP clearing trades in the other 11 markets.
The LSE's Baikal dark pool platform was delayed after the
collapse of Lehman Brothers, its erstwhile partner. The exchange
continues to target a second-quarter launch.
An LSE spokeswoman said the exchange has been reviewing Baikal's
technology since September, and noted the appointment of several
executives to lead the initiative, including Baikal's Chief
Executive John Wilson, a former executive at Lehman and UBS AG
(UBS).
NYSE Euronext's SmartPool recently named former Deutsche Bank AG
(DB) executive Johanna Danby as chief operating officer, with
Charles Armytage, formerly of Thomson Reuters Corp. (TRI), joining
as senior sales manager.
The platform is backed by BNP Paribas SA (BNPQY), HSBC Holdings
PLC (HBC) and JP Morgan Chase & Co. (JPM).
The impending launch of SmartPool follows the announcement that
the New York Block Exchange, or NYBX, a joint venture between NYSE
Euronext and broker-dealer BIDS Holdings LP, will go live
Thursday.
NYBX represents the exchange's effort to attract more block
orders - 10,000 or more shares - to its U.S. markets. The platform
gained approval from the Securities and Exchange Commission this
week.
Separately, NYSE Euronext is prepping NYSE Arca Europe, its
European multilateral trading facility, or MTF.
The unit, which will target high-frequency trading in blue-chip
stocks, is NYSE Euronext's answer to intensifying competition in
European equity trading, where MTFs such as Chi-X Europe, BATS
Trading Europe, Turquoise and Nasdaq OMX Europe have put pressure
on established bourses.
"We see the European market as an opportunity and a risk," said
NYSE Euronext Chief Financial Officer Mike Geltzeiler, speaking at
a Citi Investment Research conference Wednesday.
While Geltzeiler said the exchange company is at risk of losing
business in its established equities markets in Brussels, Paris,
Amsterdam and Lisbon, NYSE Euronext management has been pleased
with how its market share has held up following the arrival of MTF
competitors last year.
Also, NYSE Euronext is building relationships with
high-frequency traders it hopes will sign on with SmartPool, NYSE
Arca Europe and other efforts in the region, Geltzeiler said.
An NYSE Euronext spokeswoman said Wednesday there remains no
start date for NYSE Arca Europe.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
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