NASDAQ OMX
confirmed this week that it will close NEURO, its London based MTF, at the end of next month. Given that it was backed by the mighty
NASDAQ OMX why did it fail and is this the end of the MTF model as we know it?
It didn’t help that
NEURO launched at the height (depth) of the credit crisis, but it always seemed to struggle to develop a real identity of its own.
Chi-X was first and
Turquoise had a bunch of investment banks priming it with liquidity whilst
BATS has always picked its fights carefully and punched effectively above its weight. So what’s next?
Fragmentation continues on the same trajectory – upwards - and, it seems, is spreading to new areas too. On this point, I was at an event organised by
Goodacre and
APCIMS on Monday where
Citadel’s Matteo Cassina and
Equiduct’s Peter Randall were extolling the virtues of
their MTF in the RSP space. This struck me as a good example of what it’s all about.
Equiduct enables
Citadel to bring its very efficient market making to bear on retail order flow. This narrows spreads which is good for best execution but challenges the existing RSP market makers.
The same is true for the mainstream MTFs as they enabled other HFT market makers to step to the front of the queue for institutional flow in a very similar way. Sadly
NEURO seemed unable to attract these sorts of players and so was unable to build enough momentum to gatecrash the fragmentation party.
Anyway, I know that
NEURO’s CEO Charlotte Crosswell and her team are both talented and dedicated so I’m sure they will make their presence felt as the liquidity war intensifies.