Featured in its final report on equity transparency, published in December, the European Securities Markets Authority (ESMA) added an additional line to its text surrounding the specific characteristics of negotiated transactions, preventing exchanges from using the model on their own behalf.

“A negotiated transaction […] shall be considered to be a transaction which is negotiated privately without the assistance of a system or trading protocol operated by a trading venue,” said the watchdog in its findings.

Read more – Early bird catches the worm: A look at the race for first mover advantage in Europe’s emerging crossing network landscape

Speaking to The TRADE, sources familiar with the matter confirm that the changes were made last minute and without industry consultation.

ESMA declined to comment on the changes.

Trajectory crossing became a prominent topic throughout the industry for a short period last year, with a flurry of new venues planned to go live throughout the first half of 2025. In the last six months, Aquis, Cboe Europe and Nasdaq Europe have all confirmed plans to launch European trajectory crossing products using the negotiated transaction model.

Read more – Cboe Europe new VWAP crossing service to launch in Q4

However, ESMA’s recent decision has all but banned the offerings in Europe, roadblocking their broader plans and leaving the pan-European trading venues with their UK versions only.

Cboe’s UK VWAP-X service went live last year, however, its European counterpart was delayed to Q1 of this year due to regulatory hurdles.

“We’re disappointed by the recent ESMA proposal that could limit the availability of trajectory crossing within the EU venue ecosystem, to the disadvantage of EU-based investors and brokers,” Natan Tiefenbrun, president, North American and European equities, Cboe Global Markets, told The TRADE.

“Our focus is on growing the user base of this platform in the UK, which launched in Q4 2024, whilst continuing to engage with regulators as we seek ways to extend the service to include EU equities.”

Aquis Exchange’s new UK VWAP matching service is set to go live in the first quarter of this year, as revealed by The TRADE in December.

Speaking to The TRADE at the time, Aquis confirmed that the service had received a non-objection from the UK’s Financial Conduct Authority (FCA) and that it was in the process of working with regulators in Europe.

Read more – Aquis VWAP Match service set to go live in Q1

“The launch of Aquis VWAP Match (‘AVM’) is continuing as planned in the UK, and we are excited to bring this product to our UK members very soon,” a spokesperson from Aquis told The TRADE.

“We are continuing dialogue with our European regulators and, as always, maintain a suite of products to meet the trading needs of our members in line with jurisdictional regulation.”

Crossing services as a concept is not a novel one for Europe. Scrapped in 2018 under Mifid II, former broker crossing networks (BCNs) used a similar workflow. Prior to the regulatory change that banned the ‘venues’ among other market changes, many brokers would leverage their algo plant to do VWAP or trajectory crossing.

Given the regulatory changes brought in by ESMA in December, this flourishing landscape is set to look vastly more different in Europe than expected.

“This regulatory development presents challenges to our planned service launch in Q1 2025,” said Nasdaq in a statement. “We remain committed to providing PureStream to our clients and will continue our dialogue with the regulators as well as exploring alternative solutions to advance in this direction.”

The post ESMA thwarts European trajectory crossing plans with last minute rule change appeared first on The TRADE.

Alex Dalley

Dalley has been promoted to the role, having previously served as head of Cboe NL as well as co-head of Cboe Europe’s equities sales division. 

He was one of the first employees to join Cboe Europe (then Bats Europe) in 2008, where he held responsibility for building the MTF’s trading participant community as head of sales.  

Before joining Cboe Europe, Dalley served at the London Stock Exchange (LSE) as head of membership and exchange trading, directing exchange trading sales, client management and member firm acquisition.  

As part of the new role, Dalley will report to Natan Tiefenbrun, president, North American and European equities.  

“I look forward to working with the best-in-class team we have in Europe to support our continued growth and introduce more innovation and efficiencies for our customers and the markets we serve,” said Dalley. 

Further equities-related appointments include Jerry Avenell, who was named head of sales for European cash equities, having previously served as co-head of sales. He will report directly to Dalley.   

In addition, Julie Zhou will take on responsibility for leading continental EU sales, having previously served as director of sales. Zhou will report to Avenell.  

“These are well-deserved promotions and new roles for all involved, and I’m particularly excited for Alex to assume the role of head of European equities,” said Tiefenbrun.   

“He has a long and highly successful track record in European equities venue landscape, and I look forward to continuing to work with him and the rest of our talented team in support of our strategic growth plans and to advance our position as Europe’s largest and most innovative stock exchange.” 

The post Cboe Europe promotes internally for new head of European cash equities appeared first on The TRADE.

Natan Tiefenbrun

The new offering will allow users to source and match liquidity at a forward benchmark price and is scheduled to launch on 21 October, subject to regulatory approvals.

Early adopters of the new trading service include Bernstein, BNP Paribas, BMO Capital Markets, Instinet Europe, Jefferies KCx and Virtu Financial.

“Jefferies welcome this innovation enabling us to provide incremental liquidity opportunities to our client base,” said Ben Springett, head of electronic and program trading, EMEA at Jefferies. 

“VWAP crossing mechanisms can unlock liquidity that otherwise wouldn’t necessarily meet on a multilateral venue, utilising a mechanism that we have seen prove beneficial for algo performance on a range of benchmarks.”

Salvador Rodriguez, EMEA head of global execution services at Instinet Europe Limited, added: “Benchmark Crossing offers an encouraging innovation in equity market structure in EMEA that should improve the ability for algos to find high quality counterpart liquidity. The approach and implementation should allow for agency algos to trade versus multiple benchmarks at a fair price with a good balance of simplicity, as well as allowing more complex control features based on differing client interaction requirements.”

Cboe BIDS VWAP-X is being provided as a service of Cboe BIDS Europe, and will utilise BIDS’ conditional trade negotiation and execution workflow to match orders based on a standard, exchange-regulated volume weighted average price (VWAP) methodology.

Market participants will be able to submit conditional VWAP indications of interest (IOIs) into the service.

Following a potential match, users will be invited to firm-up their IOIs, and after eligible order quantities are matched a standard matching cycle will take place to calculate the interval-VWAP trade price, the firm explained.

Trades will be reported as off-book, on-exchange executions in real-time, which will then be able to be centrally cleared through Cboe Europe’s interoperable clearing model. The service will be accessible to the sell-side through FIX connectivity at launch.  

“We are delighted to have secured such a strong group of initial participants to support Cboe BIDS VWAP-X and are in active discussions with numerous others who are looking to utilise this service at the earliest opportunity,” said Natan Tiefenbrun, president, North American and European equities at Cboe Global Markets.

“This demonstrates that we’ve listened to our participants to meet their needs for an exchange-regulated crossing platform to execute participative volume at an interval-based price. We’re excited to be bringing this first-of-its-kind service to the European equities market and help enhance execution outcomes for end investors.”

Chris McConville, global head of execution services and trading at KCx, added: “KCx welcomes this innovation to the European market. We believe trajectory crossing is a positive disruption to the marketplace and could provide incremental liquidity to our client base.”

The post Cboe’s BIDS VWAP-X receives sell-side support ahead of October launch appeared first on The TRADE.

Set to launch in the fourth quarter, the VWAP-X service will be made available through block trading platform Cboe BIDS Europe and will give users a greater chance of sourcing and matching liquidity at a forward benchmark price.

Natan Tiefenbrun

It will utilise BIDS’ conditional trade negotiation and execution workflow to match orders based on a standard and exchange-regulated VWAP methodology. Participants will be able to submit conditional VWAP indications of interest (IOIs). Once a potential match is found, firms will be given the opportunity to firm-up their IOIs.

Trades will be reported in real time as off-book on-exchange executions. They will be centrally cleared through Cboe Europe’s clearing model.

“If you’ve got natural buyers and sellers trading participatively using VWAP, %volume or anything quasi-scheduled or using a volume tracking component, you can match the buyer with the seller without either one of them having to incur spread costs,” president of North American and European equities at Cboe Global Markets Natan Tiefenbrun told The TRADE.

“Brokers are going to submit indications and then we’re going to match those indications and invite the respective counterparties to submit firm orders for matching. It’s like a forward price benchmark cross where you agree the quantity and the time horizon and it’s a VWAP benchmark but the forward element is the VWAP for the next N minutes. Only at the end of the period do you find out what price you traded at.”

Once launched, the service will be accessible by sell-side participants through FIX connectivity. Testing will begin in Q3 ahead of the Q4 launch, subject to regulatory approvals.

Europe’s first mover

While this workflow is common in the US, Cboe’s new service will be the first of its kind to launch in Europe. Other European venues are reportedly also exploring launching similar new services. Aquis is rumoured to also be preparing for the launch of a similar offering before the end of the year.

When reached out to by The TRADE in May, the exchange declined to comment.

Meanwhile, some of the existing US-based players that leverage similar business models are also weighing up an expansion in the region. Among the names allegedly exploring a move are PureStream and IntelligentCross. Also planning to make a move is OneChronos which is set to launch in Europe in 2025.

Read more – Early bird catches the worm: A look at the race for first mover advantage in Europe’s emerging crossing network landscape

Crossing services as a concept is not a novel one to Europe. Scrapped in 2018 under Mifid II, former broker crossing networks (BCNs) used a similar workflow. Prior to the regulatory change that banned the “venues” among other market changes, many brokers would leverage their algo plant to do VWAP or trajectory crossing.

“It was a market mechanism that was very value additive to institutional customers of brokers that essentially was substantially withdrawn from the market because of Mifid II,” explains Tiefenbrun.

Cboe is now set to become the first mover in this space, reintroducing this workflow to institutional investors. The challenge, he explains, in launching the capabilities as a venue is the risk of information leakage.

“It’s different messaging and event workflow and a different information dynamic. You need the messaging flow because doing this in an external venue is very different to having an internal process peering over the algo engine wall to see how many orders there are and which ones might match,” he says.

“In our model as a venue, we’re going to have to tell brokers you’ve got a preliminary match. That means potentially that people now know something that they might not have known before. You do have to really think through the information dynamics and how you’re going to monitor and survey use to the service very carefully to make sure there is no abuse.”

Cboe confirmed in a statement that the new service will benefit from BIDS’ protections against information leakage surrounding IOIs, including disclosure and interactions controlled by customisable tools and counterparty score-carding and filtering based on past trading behaviour.

The exchange has secured the MIC codes VWAP and XWAP for its new service. A Cboe spokesperson confirmed pricing details for the new service will be confirmed closer to the launch.

Tiefenbrun was unable to confirm whether the service is set to launch on Cboe’s US venues simultaneously given the regulatory separation between Cboe and BIDS in the region.

The post Cboe Europe new VWAP crossing service to launch in Q4 appeared first on The TRADE.

The watchdog is expected to publish its results in the fourth quarter of this year and the findings will heavily impact who will go on to bid as part of the tender process, which is expected in the second half of 2025. As anyone reading the consultation can see, there is still a plethora of creases that need to be ironed out across latency, the commercial model, and many of the technical standards.

Currently the market has one bidder to provide the consolidated tape: EuroCTP, the exchange-backed initiative. However, with a piece of financial infrastructure as essential as this coming to Europe for the first time, one would hope there would be an element of competition in the tender process. It’s hard to classify someone best in class when the class consists of one. As things currently stand, ESMA is going to have an awfully easy job on its hands selecting its champion.

With the consultation now open, perhaps its results will generate some welcome competition for EuroCTP.

One bidder to rule them all

Backed by 14 exchanges as its shareholders, EuroCTP was first announced in the third quarter of 2023. The start-up is now in the process of firming up its plans to make its official bid in 2025.

As a start-up, the firm will not use in-house technology. Chief executive of EuroCTP Eglantine Desautel tells The TRADE that EuroCTP has finalised the shortlisting process for its prospective technology partners and is working towards a final selection for August or September.

With the ESMA consultation results due in December, Desautel explains that the joint venture intends to take some bets ahead the results in order to give itself enough lead time to develop its bid: “We cannot afford to wait for everything to be set to start our delivery work.”

EuroCTP’s backing by European exchanges has been dubbed as both a strength and a potential weakness, however, further fanning calls for a competing bid to come to market. As the core venues for Europe and hosts to the reference price-generating lit continuous markets, it makes sense for exchanges to be heavily involved in the implementation of Europe’s first consolidated data source.

However, looking at the rhetoric around the consolidated tape debate that has plagued the Mifid II Review for the last few years, one can’t help but notice that it is those that were least in favour of a consolidated tape, in particular the much sought after inclusion of pre-trade data, that now make up the shareholders board of the most advanced bidder.

On the other hand, their role in EuroCTP could offer a welcome solution to said problem. Exchanges were concerned over the damaging impact a tape could have on revenues they make from data products. As shareholders of the tape provider, those concerns could be alleviated.

“EuroCTP is a standalone company,” Desautel confirms. “Like any company we have shareholders and shareholders are not involved in the day-to-day activities. The company was created by putting serious money into it to make it work so it’s definitely not a plan just to derail the CTP agenda.”

Contenders

Among those exploring a contending bid for the CTP is French consulting firm, Adamantia Group. Engaged by the buy- and sell-side in 2022 to explore the functional use cases of a consolidated tape, the firm is now exploring becoming an industry led candidate to rival EuroCTP.

“We have reached a new phase in the initiative to assess whether this group or an extended group of firms could possibly apply as a candidate to propose a real alternative to the only official bidder,” Antoine Pertriaux, strategy consulting and research in the financial industry at Adamantia Group tells The TRADE.

“How do you proceed with the selection process when you have only one candidate? We think it will be valuable for the industry to have multiple options in order to challenge each individual proposal and give a better possibility to select the best one.”

Adamantia Group is now assessing its potential to become a candidate and exploring potential technology providers that it could partner with in order to achieve this goal. Backed by over 10 buy- and sell-side institutions, Adamantia has been vocal in its desire for greater pre-trade data included in the tape.

“The idea is to keep it [our initiative] open to any firm who shares the same views and objectives for the CP. In terms of progress, we have added additional firms and there are many more who are also interested in participating,” says Pertriaux.

Natan Tiefenbrun

“All are providing direct support to our initiative. In terms of our current progress, we are finalising the more operational and technological aspects. We need to find the right partner to develop the infrastructure. We’ve had very good discussions which gives us confidence that we can put something together.”

However, their future bid is still unconfirmed.

Also exploring the potential for a joint venture bid is Cboe Europe. Cboe has been transparent with its stance over the last few months that it would consider placing a bid as part of a consortium. However, when asked when, with who, or what that might look like, president of North American and European equities, Natan Tiefenbrun, is holding his cards close to his chest.

“If we were to bid, we would probably have a preference to bid in partnership with others rather than alone – given the financial commitment and risks involved, and the potential benefits of having more expertise available,” he tells The TRADE.

Aquis and the London Stock Exchange Group (LSEG) declined to comment on their potential involvement in the CTP when contacted by The TRADE.

Still an awful long way to go

With ESMA’s consultation in mind, there is still an awful that must be clarified ahead of the tender process next year that will ultimately discourage or encourage further competing bids from across the industry.

Interestingly, among the topics put up for debate in last week’s consultation is ESMA’s proposed model on consortiums. The consultation questions whether or not competition is damaged if a firm that is able to provide the tape on its own is allowed to take part in a consortium.

EuroCTP’s model is a consortium model and should it come to fruition, Adamantia’s model would be similar. Cboe has also made it clear it wouldn’t come to the table outside of a joint venture. These rules and the outcome of the consultation will therefore be closely monitored.

“There is established EU guidance on bidding consortia and that is something we’d have to take into account,” adds Tiefenbrun.

So far legislation around the tape has been somewhat vague. The industry will have a single consolidated tape provider per asset class. It’ll include post-trade data and pre-trade to the extent of level one top of book unattributed data. There will be no mandatory consumption but there will be mandatory contributions, with an opt out scheme for smaller venues.

The revenue model has more structure than before but still needs fleshing out and this is still open to change following the consultation. For example, smaller venues under a certain level will get a six times multiplier on their traded value relative to the value of the consolidated tape. An additional three times multiplier is also added if the venue has had an IPO in the last three years in a bid to encourage more listings. Extra credit is also awarded to bigger venues for any recent IPOs.

However, outside of this, aspects around the tape’s latency, its commercial prospect and costs, its governance structure, its licensing model and its data provision model all need to be finalised in ESMA’s consultation. And, once finalised, these details will ultimately shape the list of contenders who intend to compete to provide it.

Eglantine Desautel

“Our understanding is that connectivity cost between the data contributors and the tape will be the responsibility of the data contributors,” explains Eglantine. “One question we would like to emphasise is what are the communication protocols or the qualitative elements of this communication to make sure that we get the data as fast as possible and in the proper format? “If this kind of thing is pushed into technical standards then it will avoid never-ending discussions.”

Latency will be a huge contributor to the cost of running a tape. Implementing a microsecond latency tape like in the US will be much more expensive than a cheaper tape using milliseconds. US exchanges are geographically not as far apart as some exchanges in Europe and the UK for example this is something that must be considered when designing a tape.

In Europe, the tape isn’t going to be baked into best execution in the same way that is in the US. Pair this with no mandatory consumption in Europe and it means that ultimately users will only buy the data if its attractively priced and deemed useful enough.

“For EuroCTP there is a clear understanding that the tape is not meant to be a high margin activity and it will be strictly organised around the reasonable commercial basis provisions,” explains Desautel. “It’s really important not to overshoot in terms of technology. We can do microseconds if this is what the community needs but there is no need to create an expensive infrastructure that nobody will need.”

The tape provider is also currently set to change every five years. This in itself is something to be considered for those that might look to throw their hat into the ring to host it. Providers must assess how commercially viable hosting the tape could be, weighing up the setup costs, the time to profit and running costs against potential revenues that could be made.

“A change of provider at the five-year mark seems somewhat unlikely but not impossible,” says Tiefenbrun. “You have to make a decision about generating a return in the first five years or having a longer-term horizon for making back your investment. There’s definitely a question that raises around the risk profile of operating the tape. Ultimately it comes down to how the service is priced and how many users there are for those services.”

Data vendors and the golden source

An element that will be interesting to watch play out once the consolidated tape is – finally – established, will be the role of data vendors. While they may not make bids to host the tape themselves, the role they play in supporting a tape will be central to its success.

Many participants have begun to ask questions around how symbols might change on terminals for example or how historical data for a certain instrument will be shown. Will the European consolidated tape price of an instrument be the default one that is shown for example? All of these details will hugely impact how widely adopted a consolidated data source is.

Antoine Pertriaux

“The data service providers will play a critical role for the success of the tape because consolidating the data into the CTP is one thing but the key question is how the users are going to consume the data,” added Pertriaux.

“Clearly the expectation from the user is that those players will be able to intermediate the CTP data and make it available through the existing channels. This means no specific investment or adaptation of systems on a user side. Just click on the new product through the terminal and have access to the EBBO or to the tape data. It will be crucial that the CTP make sure that those players are ready from the start to display the data.”

Bloomberg and FactSet declined to comment when approached by The TRADE.

There’s still much that needs to be clarified before a meaningful competitor to EuroCTP can emerge, but it’s all still to play for. There’s a handful of potential contenders but as it stands, we could have a winner by default. Stay tuned with The TRADE for more updates.

The post Will the European equities tape tender process end up as a one-horse race? appeared first on The TRADE.

The new order types are available in the Cboe UK and Cboe NL PABs effective today, The TRADE can reveal.

“In keeping with our innovative ethos, we’re launching four new sweep order types which allow our participants to target liquidity in up to three of our execution mechanisms (dark, periodic auction and lit) through a single order,” said Natan Tiefenbrun, president of Cboe Europe, speaking exclusively to The TRADE.

“This makes it very simple and efficient for our participants to access greater size or price improvement opportunities, before accessing Cboe’s Lit order books.”

The new sweep order types will allow participants to access the dark, PAB and lit order books without the need to submit multiple orders, alongside the benefit of potential latency saving by eliminating the need to have separate orders.

For several years, Cboe has offered dark/lit sweep order types which are used by participants to capture price improvement on orders destined for lit books. For the first time, the new sweep orders will allow participants to check for liquidity in Cboe’s PAB before targeting liquidity on the local Cboe lit book through a single order.

The launch will also help expand use cases of PAB to additional phases of a broker’s smart order routing (SOR), while delivering execution quality benefits more widely.

“Historically, most brokers have integrated periodic auctions into the liquidity seeking phase of their SORs, but not into the passive posting or spread-crossing phases. With these order types, we’re trying to attract both spread-crossing and passive posting flows.  We already see more than 20% of spread-crossing orders finding price improvement in PAB,” Tiefenbrun told The TRADE.

“What we’re saying to participants is that, before they cross the spread in the Lit, there’s a very good chance that there is price improvement and/or larger size that they could access in the periodic auction. These sweep order types will make it much easier and convenient to do that, without having to do a significant amount of software development. We’ve designed this so that we can enable it for clients with minimal changes on their side.”

The post Cboe launches new sweep order types to bolster liquidity targeting for traders appeared first on The TRADE.

In light of this progress, negotiations with the European Parliament can begin with a view to reaching a final agreement on the future legislation. Several Member States have taken it in turns to head up the Mifid council and discussions, however none have reached this stage.

Among the proposals first tabled last week are plans for a close-to-real-time consolidated tape which includes post-trade data together with best bids and offers available at the time of the particular trade. European best bid and offer available at the time of the trade from the most competitive markets will also be included. The lack of pre-trade data in the tape proposals have been labelled by some as unambitious.

“A tape that includes real time post trade data, supplemented with “snapshots” of pre-trade data fails to meet a number of important use cases for the consolidated tape,” said Cboe Europe in a statement.

“However, it is important that the issue of whether or not data needs to be real time has been settled, and we note that the inclusion of snapshots will require market data contributors to provide real time pre-trade data to the consolidated tape provider from its inception. This means that future development of the tape to include real time pre-trade data will not require further technical work by market data contributors.”

Meanwhile, the tape proposal has stayed its course with regards to data contribution exemptions for smaller and independent venues – an area that has proved contentious for those that argue this would fragment the market further.

The proposals also clarify limits on dark trading – a key topic of divergence post-Brexit between the UK and Europe. In the mandate agreed upon today, the Presidency has proposed scrapping the current double volume cap regime and replacing it with a simplified EU-wide threshold of 10%.

The changes, in particular those proposed around dark trading, mark a significant U-turn from the Czech presidency. In its earlier proposal, the it had originally suggested more of an alignment with the UK’s Wholesale Markets Review proposals to relax rules around dark trading by scrapping DVCs for a pool of stocks to assess the impact on price formation.

“Today’s agreement represents a significant improvement over the status quo; it fully mitigates the theoretical risk of a wholesale transfer of liquidity from lit venues to those operating under the reference price waiver, whilst recognising that transparency and price formation can be better enhanced via the introduction of a consolidated tape rather than by arbitrary restrictions on investors’ ability to pursue best execution on EU venues,” Cboe Europe said.

Elsewhere, the draft regulation now set to be negotiated with the EU Parliament suggests a restriction on payment for order flow (PFOF), however, the regulation leaves “discretion” for Member States to allow the practice in their territory should they wish.

The regulation also sets out changes to the deferral regime including instructions that liquidity providers in bonds should not mask price and volume of transactions for very large trades for more than four weeks. For OTC derivatives the proposal sets out plans to calculate deferrals based on a “flexible basis”.

“While we still need to understand the details of the Council agreement, the progress made is clearly a step in the right direction and we commend the Czech Presidency’s hard work for getting this over the line,” said the Association for Financial Markets in Europe (AFME) in a statement. 

“AFME members in particular welcome the progress made by Member States in reaching this agreement by recognising the need for investor choice in equities trading mechanisms which will allow for cheaper and more efficient execution to be delivered to end investors. However, imposing artificial limitations on investors’ choice by maintaining a hard volume cap in the level one framework may still hinder the EU’s ability to attract global investors to its markets.”

The post Czech Presidency achieves Mifid milestone as compromise is approved appeared first on The TRADE.

The early signs are positive: A real-time pre and post-trade consolidated tape for equities has already gained strong support across key EU institutions, and is something we at Cboe have long advocated for to help drive investment and improve the resilience of markets. In the area of equity transparency, the bloc has a choice: Pursue an approach, supported by incumbent EU exchanges, of forcing market participants into low latency central limit order books, in the naïve belief that this will enhance institutional investor outcomes; or realise that the best way to attract investors to Europe is by catering their diverse needs and offering different trading mechanisms for price and size discovery.

The UK is embracing the latter approach, and we are hopeful EU policymakers will follow suit to restore its competitiveness and promote open, competitive and pan-European markets, which ultimately benefit end investors. Elsewhere, we believe brokers will continue to migrate their passive, displayed liquidity to pan-European venues that offer higher execution certainty and lower costs, as well as to alternative mechanisms such as pre-trade transparent Frequent Batch Auctions that help minimise price slippage.

Improved transparency is elusive – why? Trade reporting remains fragmented, not standardised and APA data is difficult to access. But hope exists! Amendments to MiFID II in 2021 lifted the technical and commercial impediments to a CTP emerging. The glass is starting to look half full.

Dissenting voices remain from those seeking to protect entrenched positions. Those in support of the CT need to up their efforts to present the benefits. Peering into 2024, I predict the CT will encourage growth in market participation, reduced market data costs and improvements in data products: liquidity analytics, TCA, pricing engines and portfolio valuations.

In 2023 [I predict] we will see political agreement on the legislative framework affecting market transparency. Q3 will mark the start of The CT tender process and by year end a CTP will be appointed. The CT will be one run as a market utility not as a data monopoly.  Surely, this is the fairest way? 

“The best way to predict your future is to create it,” Abraham Lincoln.

Adam Conn, head of trading at Baillie Gifford: T+1 settlement – coming to a market near you? Assuming the US and Canada go live in 2024, I imagine the full impact of mismatched settlement dates; funding costs and the ability to trade settlement FX become more apparent to market participants. Will the UK and EU follow suit? I don’t want to spoil the surprise. 

Matt Short, equity trading desk manager, BNY Mellon Pershing: Regulatory reform of global capital markets will continue to influence the trading landscape in 2023 and beyond. Cost transparency and payments for order flow (PFOF) is a growing focus for regulators around the world but differing opinions on dark pools and alternative trading systems is creating divergence that will ultimately lead to increased market fragmentation in the year ahead.

Market data pricing is another priority for regulators, but standardising data across jurisdictions requires consensus from regulators, exchanges, SROs, broker-dealers and third parties – a highly complex undertaking and a process that will result in a lack of harmonisation between markets (e.g., UK and EU) as they build out their own agendas for capital markets growth. This increasingly complex, and in some cases fragmented, regulatory agenda will have a disproportionate impact on smaller firms, with the time, tech and expertise it takes to be compliant increasing fixed costs and subsequently impacting the bottom line.

Therefore, heading into 2023, we expect to see more mid-sized firms turning to outsourced solutions to build efficiencies and avoid the rising cost of high-quality execution, focusing instead on fiduciary obligations to clients.

Linda Gibson, director and head of regulatory change, BNY Mellon Pershing: Resilience and adaptability will be essential strengths for firms through 2023. Trading professionals need to be cognisant of the shift away from the predictable regulatory agenda they are used to as UK and EU regulatory bodies step up their often politicised post-Brexit battle to lure financial services to their respective shores. To date, we have seen UK and EU regulators take different approaches to operational resilience, CSDR and MiFID II, and divergence on rulemaking should be seen as a given moving forward. Politics will continue to shape the UK-EU relationship for financial services, with the UK taking a principles-based approach to regulatory reform while the EU adopts a more prescriptive plan of action. For example, the UK is looking to remove the share trading obligation (STO) and double volume cap (DVC) as part of the Wholesale Markets Review whilst EU proposals will recalibrate or make technical changes.   

In UK policy, we can expect tax reductions and deregulatory initiatives from the government in 2023 and beyond in an attempt to boost international competitiveness and stimulate financially-led GDP growth at a time of economic decline. As outlined in Jeremy Hunt’s autumn statement, this will include a plan to repeal EU red tape and replace it with rules tailor-made for the UK. However, it is important for firms to remember that even deregulation will require internal changes and adaptations. It won’t simply be a matter of switching off on certain compliance matters.

James Baugh, head of European market structure, Cowen Execution Services: We should hopefully get clarity in the early part of the year on where the European Council, Parliament and Commission stand on key issues regarding proposed dark and Systematic Internaliser thresholds and the Consolidated Tape. However, it’s unlikely we’ll see any agreement reached until mid-year or later.

This will depend on whether a compromise can be reached between those looking to compete with the UK versus those considering more inward-looking policies. Regardless, changes are not likely to kick in until 2024. Separately, the FCA will hopefully provide some clarity on several of its proposals, including the UK’s version of the CT. In the interim, the EU and UK will have to contend with a number of operation hurdles in 2023, including the end of the SEC’s No-action letter on “hard dollar payments” for research, which kicks in mid-year and readying for the introduction of T+1 settlement in the US which is currently scheduled for Q1 2024.

Liquidity trends will likely continue on their current trajectory as alternatives challenge the incumbent exchanges for market share and the primary close remains under competitive pressures. Retail will also likely continue to be a topic of discussion into 2023, including whether the EU will impose an outright ban for Payment For Order Flow. And finally, I hope ESG continues to be part of the discussion regarding the improvement of trading workflows and the wider execution business throughout next year.

Hayley McDowell, EU equity electronic sales trader / EU market structure consultant, RBC Capital Markets: Next year will be a critical one for regulation in European equity markets. Approaching two years after the UK formally left the EU, the bloc is still contemplating the future of regulatory alignment with the UK. Despite recent market earthquakes, the UK remains a vital market in Europe and any divergence presents a major challenge to participants from across the spectrum. Next year, the MiFID review will come into sharp focus – as the EU looks to shore up aspects of the regulation while maintaining its competitiveness not just with the UK, but globally.

We can also expect a debate around what an effective consolidated tape looks like – there is a huge opportunity to grow secondary markets – but the success of the tape will depend on the proposals put forward by the EU. Market participants will be keeping a close eyes on the regulatory debate in Europe and whether it will bolster market structure or fall short.

The post The TRADE predictions series 2023: Market structure and regulation, part one appeared first on The TRADE.

The TRADE is delighted to introduce the illustrious shortlist for one of the biggest awards of our Editors’ Choice range: the closely fought category of Outstanding Equities Trading Venue. In a competitive and crowded landscape, numerous players stand out and this year it was particularly hard to whittle down the longlist. The nominated venues have all stood out over the past year for their innovative approach and outstanding performance: read on to learn more about Aquis Exchange, Cboe Europe, Euronext, Nasdaq European Markets and Turquoise.

Aquis Exchange 

Aquis has seen a year of strong growth, both on its lit platform and with its entry into the dark pool space, following on a promising 2021 performance – last year net revenue reached £16.2 million, representing a growth of 42% on the year prior.  

In April 2022, Aquis Exchange assumed the dark pool activities of UBS MTF, with the service now known as Aquis Matching Pool (AMP). Since then, the exchange has been focused on migrating AMP onto its in-house technology, with the migration concluding in September. 

The exchange has also enhanced its Auction on Demand (AoD) service on both the UK and EU platforms. AoD now supports mid-pegged orders, offers a choice of Day orders or ‘Good for Auction’, and allows members to specify a Minimum Acceptable Quantity. 

Meanwhile, the Market at Close (MaC) order type grew in market share, from constituting 3.4% of European closing auctions in July 2021 to 5.8% in July 2022. 

It has also grown its membership base, with new members such as Optiver and others joining; while in May this year it entered into a collaboration with BMLL to provide insights into market structure dynamics. Through the collaboration and use of BMLL’s Level 3 Data and analytics, Aquis is now able to monitor and evidence liquidity dynamics, and offer its members third-party, independent verification of passive liquidity’s availability on its own venues compared to other European exchange.  

Cboe Europe 

The past 12 months have been a landmark period for Cboe Europe. In equities, it became Europe’s largest stock exchange by market share in April 2022 for the first time since January 2019, and has been the largest stock exchange by market share every month since June 2022, with an overall European equities market share of 24.7% in July 2022 – its highest share since January 2016.  

EuroCCP, Cboe’s wholly owned pan-European clearing house, provides clearing services for CEDX. Beyond its diversification into equity derivatives clearing, EuroCCP has also demonstrated solid performance in cash equities, where it remains the most-connected CCP in Europe, offering equities clearing services to 47 trading venues. It has seen strong gains in preferred clearing, with over 14% of total cash equity volumes on Euronext’s exchanges in Amsterdam, Brussels, Lisbon and Paris cleared via EuroCCP through this model as of 30 June, up from 2% at the start of the year. 

Cboe Europe also deserves a mention for its thought-leadership role, supporting and advocating (often vocally) within the industry on a wide range of issues. It recently collaborated with trade associations on a statement of principles for establishing an EU equity consolidated tape, for example, an issue on which its supportive position is well-known. 

The exchange is also working to make pan-European market data more accessible. For example, making its own data available via the cloud, which means lower infrastructure costs for those consuming it. Other key developments throughout the year include the appointment of Nick Dutton, Cboe Europe’s Chief Regulatory Officer, to the FCA’s Secondary Markets Advisory Committee and the group’s membership of the Sustainable Trading initiative in May.  

Euronext 

The biggest pan-European exchange, connecting seven markets across the continent, Euronext had a strong year over 2021-22 with surging trading volumes and a series of successful acquisitions.  

The group saw its trading revenue swell to €465.3 million in 2021, driven by its completed acquisition of Borsa Italiana from the London Stock Exchange Group (LSEG) in April. In its fourth quarter and full year results, the exchange operator confirmed a 27% growth of trading revenues, alongside yield management in cash trading offsetting lower volumes compared with 2020. Fixed income trading revenue also increased to €65.8 million driven by a 45% growth year-on-year in its MTS cash trading activities. 

The strong performance has continued – trading revenues more than doubled in the first quarter, despite the adverse geopolitical conditions, while the second quarter saw trading revenues jump a further 15% with robust performance across all asset classes.  

In June this year, Euronext also entered into an agreement with Nexi for the acquisition of the former’s technology businesses, which currently powers Euronext’s fixed-income trading platform MTS and Euronext Securities Milan. Thanks to the acquisition of Borsa Italiana Group, Euronext now also operates its own clearing house, Euronext Clearing (ex. CC&G), that is planned to provide clearing services for all its markets starting from 2024, and added a fourth CSD (ex. Monte Titoli) to its network of CSDs, Euronext Securities, in a further move to leverage its integrated value chain. 

Nasdaq European Markets 

Nasdaq’s European Markets delivered a record year in 2021, solidifying Nasdaq’s position as a leading European listings hub with 219 new equity listings, including a record number of 174 IPOs, raising a total of €13.5 billion. Nasdaq has kept this position into 2022, and even strengthened it as its Swedish Growth Market First North overtook AIM as Europe’s hottest market for growth stocks with a strong participation by retail investors. A contributing factor to the success of the Nordic exchanges is Nasdaq´s ability to attract small and medium enterprises (SMEs) to go public on its First North markets, which enables them to grow and perform better and eventually transfer to one of the Main Markets (as around 95% of its listed growth companies do). 

On the trading side, building on the strong momentum of 2020, Nasdaq saw trading volumes hit all-time highs, with equity trading increasing 7.1% to a daily average of just under €4 billion across all markets in 2021. Throughout the turbulence of the pandemic, increasing geopolitical tensions and the war in Ukraine, Nasdaq has maintained a market share of 77% of lit and auction trading in its listed shares, while continuing to reinforce its leadership in the Nordic derivatives market, including Norway, where Nasdaq has achieved a 76% market share in single stock options and +50% on index options. 

Throughout 2021, Nasdaq launched a number of products and services to further support the trading community: including options on the OMXS30 ESG index, the world’s first Carbon Removal price Index with Puro.Earth, and Nasdaq Derivatives Academy, a free educational course aimed at retail investors keen in learning more about derivatives trading. Additionally, Nasdaq has entered numerous strategic partnerships – one of which is creating an exchange system simulation service based on Sequitor technology, enabling the trading community to back-test and optimise their systems in terms of both risk and performance in private sessions. 

Turquoise 

Turquoise and its EU venue, Turquoise Europe, complement London’s primary markets with multiple additional execution channels and liquidity, offering a broad universe of more than 4,100 securities with access to enter prices and trade securities of 19 major European and emerging markets as well as US stocks, IOB Depositary Receipts, ETFs and European Rights Issues, through one interface to its LSEG data centre and membership.  

Turquoise Plato participants have traded more than €1.3 trillion of equities since its launch and continue to set new records. Average daily value traded in the first half of this year through Turquoise Plato neared €1.2 billion, and saw a record trade size of €27 million in December 2021 on Turquoise Plato Block Discovery.  

Turquoise has spear-headed in a number of innovations this year, together with its  customersits customers. Turquoise CDS Plus was launched in partnership with Simudyne, with the aim to be a one-stop shop for next generation high fidelity market simulation and algo testing. For the first time, clients can perform fully interactive testing as if it were on the live market, focusing on robust and repeatable performance testing rather than backdated conformance testing. CDS Plus uses the previous day’s tick data from Turquoise, enriched with stylised facts, making use of next generation Agent Based models which can be used to improve algorithm development, testing and benchmarking. 

Turquoise is also collaborating with M-DAQ, a leading global FX specialist, on a new service for investors who, through their brokers, will be able to execute cross-currency securities transactions and settle in their currency of choice (subject to regulatory approval). M-DAQ will contribute its patented product Trading the Right Chart (TRC). This complements well the capabilities of Turquoise, removing the need for multilateral relationships and reduces FX operational risk faced by brokers, delivering further efficiencies to equity capital markets and better outcomes for end investors. 

Appital, the equity capital markets technology solution, and Turquoise have also launched Appital Turquoise BookBuilder. This is the first buyside to buyside bookbuilding platform to give institutional investors the opportunity to proactively source liquidity. By bringing a historically highly manual and opaque process into an automated, electronic platform, they gain control over the entire bookbuilding process. Buyside firms benefit from liquidity discovery and price formation opportunities for illiquid equity positions, as well as the ability to execute large volumes on the regulated Turquoise MTF, often in multiple days’ ADV, with minimal market impact or risk of price erosion. Turquoise also became the first venue to connect to OpenFin in September 2021, offering a direct data feed to the buy-side via its operating system.  

Recently, Turquoise expanded its service with a newly enlarged US segment, which will allow global investors to trade in a greater number of US stocks through one connection, alongside UK, Swiss and European securities. The new offering improves access for investors in Asia and other geographies around the globe. In August 2022, Turquoise also received Recognised Market Operator status from the Monetary Authority of Singapore, enabling firms located in Singapore to apply for TGHL membership and access TGHL trading service. 

The winner will be announced at the Leaders in Trading 2022 gala awards dinner at The Savoy Hotel on 3 November. For table enquiries, please contact Nathan Anacleto.  

The post Leaders in Trading 2022: Meet the nominees for…. Outstanding Equities Trading Venue appeared first on The TRADE.

In the first of our introductions to the distinguished nominees for Leaders in Trading 2022, we bring you the shortlist for one of the most highly coveted awards of the industry: the category of Outstanding Exchange Group. Cboe Global Markets, Euronext, London Stock Exchange Group (LSEG) and SIX Swiss Exchange are all in the running, so read on for more information on their activities over the past year.

Cboe Global Markets 

Cboe Global Markets needs no introduction. It’s a market giant covering equities, derivatives, digital assets and FX, across North America, Europe and Asia Pacific. 

It’s the activities of Cboe Europe that drove the nomination this year, however, and the past 12 months have been on many levels a landmark period for the exchange. In equities, it became Europe’s largest stock exchange by market share in April 2022 for the first time since January 2019, and has been the largest stock exchange by market share every month since June 2022, with an overall European equities market share of 24.9% in September 2022 – its highest share since January 2016.  

The group also successfully launched Cboe Europe Derivatives (CEDX) in September 2021, an innovative, pan-European equity derivatives exchange. CEDX marked Cboe Europe’s first foray beyond cash equities and into derivatives and the initiative continues to build momentum, with over 13,000 contracts traded since launch and Open Interest peaking at over 1,600 in September.  

EuroCCP, Cboe’s wholly owned pan-European clearing house, provides clearing services for CEDX. Beyond its diversification into equity derivatives clearing, EuroCCP has also demonstrated solid performance in cash equities, where it remains the most-connected CCP in Europe, offering equities clearing services to 47 trading venues. It has seen strong gains in preferred clearing, with over 17% of total cash equity volumes on Euronext’s exchanges in Amsterdam, Brussels, Lisbon and Paris cleared via EuroCCP through this model as of 30 September, up from 2% at the start of the year. 

Cboe Europe also deserves a mention for its thought-leadership role, supporting and advocating (often vocally) within the industry on a wide range of issues. It recently collaborated with trade associations on a statement of principles for establishing an EU equity consolidated tape, for example, an issue on which its supportive position is well-known. 

Other key developments throughout the year include the appointment of Nick Dutton, Cboe Europe’s Chief Regulatory Officer, to the FCA’s Secondary Markets Advisory Committee and the group’s membership of the Sustainable Trading initiative in May.  

Euronext 

The biggest pan-European exchange, connecting seven markets across the continent, Euronext had a strong year over 2021-22 with surging trading volumes and a series of successful acquisitions.  

The group saw its trading revenue swell to €465.3 million in 2021, driven by its completed acquisition of Borsa Italiana from the London Stock Exchange Group (LSEG) in April. In its fourth quarter and full year results, the exchange operator confirmed a 27% growth of trading revenues, alongside yield management in cash trading offsetting lower volumes compared with 2020. Fixed income trading revenue also increased to €65.8 million driven by a 45% growth year-on-year in its MTS cash trading activities. 

The strong performance has continued – trading revenues more than doubled in the first quarter, despite the adverse geopolitical conditions, while the second quarter saw trading revenues jump a further 15% with robust performance across all asset classes.  

FX volumes have also been surging – up 30% in September alone, one of the busiest months ever for the exchange, while on a quarterly scale, the average FX trading volume in Q3 2022 was comfortably above the $21.7 billion mark, up 24% from $17.5 billion a year earlier. 

In June this year, Euronext also entered into an agreement with Nexi for the acquisition of the former’s technology businesses, which currently powers Euronext’s fixed-income trading platform MTS and Euronext Securities Milan, in a further move to leverage its integrated value chain.  

London Stock Exchange Group 

At over 300 years old one of our most venerable of shortlisted candidates, LSEG has gone from strength to strength this year. The exchange group delivered a strong first half performance with continued revenue growth across businesses. Total income grew by £717 million to £3.7 billion, while its Data & Analytics business posted revenues up £482 million to £2.4 billion. Capital markets and post-trade have also been positive growth drivers for the group, with an especially strong performance in PTC derivatives on the post-trade side, as it supports clients seeking to manage risk given the ongoing uncertain rate environment.  

On the investment side, it’s been an exceptionally busy year for LSEG, which completed three acquisitions in 2022. Global Data Consortium Inc (GDC) globalised its digital identity and fraud prevention offering in the Customer & Third-Party Risk business; while the acquisition of MayStreet enhanced its Enterprise Data Solutions business, expanding LSEG’s capabilities across the latency spectrum through a global low latency network of over 300 cross asset, exchange and trading venue feeds. Finally, TORA came on board to provide multi-asset order and execution management capabilities, a major addition.  

The exchange has proven to be a valuable source of capital through the unprecedented market volatility of 2022, while the group has also been active in supporting wider regulatory reform. London Stock Exchange plc earlier this year launched of a new UK Capital Markets Industry Taskforce (CMIT), comprising CEOs, chairs and industry leaders representing private and publicly listed companies, asset owners and managers and the advisory services that support their access to capital and investments, chaired by CEO Julia Hoggett.  

Finally, the Group has actively supported and invested in new technologies and FinTechs, including an investment into BondCliq to improve access to fixed income data, working with FinTech Simudyne to develop a next generation intelligence-based simulation environment for market participants, and of course the partnership between LSEG’s Turquoise and bookbuilding platform Appital.  

SIX Swiss Exchange 

Finally, SIX Swiss Exchange is another worthy contender on the list. The group has had a busy year with numerous new products and services launched since 2021: including the introduction of block conditional orders for SwissAtMid (its non-displayed pool), allowing participants to manage fragmentation and execute large blocks more efficiently.  

The group also launched SIX Digital Exchange (SDX) with a tokenised bond, the world’s first bond with a purely digital tranche ever issued in a fully regulated environment;  while in July 2022 SDX launched the first ever tokenization of equity shares in a fully-regulated CSD based on distributed ledger technology (DLT). The group has been making a strong play in the digital assets space – 2021 was a record year for products with crypto currencies as underlyings, with trading turnover CHF8.6 billion, (+673% year-on-year), and the number of transactions growing by 634% year-on-year. It also saw 74 new ETPs listed with crypto currencies as underlying, including seven world premieres, and offers access to 16 crypto currencies – the largest offering on any regulated exchange. 

We also saw the launch of Swiss EBBO (improved access to best price and depth of liquidity); the  internationalisation of CONNEXOR (including roll-out in Asia-Pacific market); enhanced Quote on Demand (trading service to improve execution quality in ETFs and ETPs). 

The group has built out its technology further as well, with the expansion of the SIX Swiss Exchange European Microwave network operated by 12H to include low latency route linking Bergamo to Frankfurt. Integration work also started between SIX Swiss Exchange and BME technology platforms completing the first deliverable of the MDDX market data feed. The integration will add further products such as SpanishAtMid, blocks and is expected to provide an overall more complete, robust trading environment within the EU. 

The winner will be announced at the Leaders in Trading 2022 gala awards dinner at The Savoy Hotel on 3 November. For table enquiries, please contact Nathan Anacleto.  

The post Leaders in Trading 2022: Meet the nominees for…. Outstanding Exchange Group appeared first on The TRADE.