BATS Beats Turquoise, Europe’s MTFs Look More Volatile Than Ever Under Mifid


The fact that Turquoise has lost its shareholder market makers has caused its volume to slump, allowing upstart (and US 500lb gorilla) BATS Europe to leap ahead in market share. Takeovers by legacy exchanges now look more likely than ever.


BATS Europe, the 500lb gorilla of the US MTF space may still be lagging Europe’s 500lb gorilla Chi-X by a significant margin but now it has surpassed Turquoise, the investment banks’ own platform, despite being much later to market.

Turquoise has lost its market makers due to the expiration of its 6 month agreement from its investment banking shareholders to provide liquidity.

This may yet prove a very significant turning point in the Turquoise story. Backed by investment banks at its outset, Turquoise was born in an atmosphere of greater hubris than is evident amongst the investment banking community today. It has been very clear to educated onlookers for a considerable period that the Turquoise story (as with many other MTFs) may end with a trade sale to a legacy exchange just as happened with the first wave of MTFs, the ECNs, in the post dotcom bubble environment.

Turquoise is susceptible to a bid simply because investment banks will take cash for any asset they can dispose of right now. That will encourage the ambitions of legacy exchanges Deutsche Borse and Euronext who have recently expressed an interest in buying a European MTF.

Otherwise, Turquoise right now looks in danger of already being a busted flush. Its shareholders have more pressing issues to deal with than providing liquidity on the fringes of Europe’s equity markets. The Turquoise MTF platform itself has simply not lived up to the frankly excessive hype that accompanied its launch. Then again, investment banks hyping their platforms only for events to make them perform below their perceived par is a recurring story in financial markets. The original Brokertec is just once such example…


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