Investment banks to launch European equities platform; compete with exchanges

Investment banks to launch European equities platform; compete with exchanges

A group of seven global investment banks have agreed to establish a pan-European equities trading platform that will compete head-to-head with the region's domestic stock exchanges following the introduction of the EU's Markets in Financial Instruments Directive (MiFID).

The group, comprising Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS, will be shareholders in a new company, which will have its own independent management team.

In a statement, the consortium says that equity trading is the region is concentrated on a number of domestic stock exchanges.

Currently EU rules require all trades to go through a stock exchange but MiFID will enable banks to trade shares internally - off-exchange - although they will be required to publish the prices of intended trades to the rest of the market beforehand.

"We are responding to the MiFID legislation by creating an integrated pan-European trading platform where equities can be traded more cost effectively, obtaining significant liquidity with greater efficiency for each and every participant in the equity markets," says the statement.

The consortium says it has already committed people, cash and resources to develop the project and has already begun meetings with European regulators.

The group will also be contacting other financial institutions over the coming weeks to encourage them to use the new platform when it is launched.

The banks backing the project are entering an already crowded market with Instinet and new venture Equiduct also preparing launches.

Bob Fuller, CEO of Equiduct, comments: "It's interesting that they've decided to go down the MTF ­ multi-trading facility ­ route, rather than opting as Equiduct has done to set up as a fully regulated pan-European electronic platform. This, coupled with our open access to clearing and settlement providers, gives us a distinctive proposition. We'll also be interested to see how the European marketplace relates to an offering owned by a small number of Tier-1 banks."

It was also reported earlier this week that US investment bank Goldman Sachs is gearing up to launch an off-exchange automated trading platform, dubbed Sigma, that will provide its European clients with access to dark liquidity pools.

Ealier this year a group of nine investment banks - consisting ABN Amro, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Merrill Lynch, Morgan Stanley and UBS - agreed that they would pool their trade transparency data and create a pan-European platform for the collection and sale of trading data that will bypass those operated by exchanges in the region.

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