Quote MTF offers to give away equity to attract business
22 September 2010 | 5998 views | 0
Quote MTF is offering to give away up to 40% of its shareholding to trading firms as it bids to secure participation in a fiercely competitive, consolidating market.
Entering the crowded post-MiFID market last September, Quote MTF is 60% owned by BRMS Holding, a Canadian firm that also has a stake in Omega ATS. The remaining 40% is currently held by management, staff and partners.
A year on from launch it is now offering to give away up to 40% as part of a "partnership programme" with trading firms as it scrambles to get support in a "marketplace under threat of reconsolidation". The group insists it needs "only a fraction of Europe's liquidity" to break even.
After an initial explosion of new platforms post-MiFID, there has recently been a move towards consolidation. Nasdaq OMX shut down its effort while Turquoise has been acquired by the LSE and last month Chi-X Europe confirmed that it has received an enquiry from a potential buyer, with Bats, another relatively new entrant, widely touted as the mystery suitor.
Tamas Madlena, CEO, Quote MTF, says: "Today's fragmented European equity market represents one of the successes of MiFID. But this landscape, and therefore the trading opportunities and potential for price discrimination, is currently under threat, as many of the existing venues merge or indeed fail due to depressed market volumes. Investors now need to take a long, hard look into the future and take a stake in it."
The platform says it will also continue to rebuff issuing rebates to passive flow in order in a bid to promote real price discrimination.
"It's difficult to offer the best price to attract retail and institutional aggressive flow if you operate a passive flow rebate model. Indeed, in the next wave of regulatory actions we may see a move against this type of inducement, as it can create a market dominated by high frequency trading, rather than a healthier mix of client, institutional and high frequency flow," says Madlena.