Instinet to launch Chi-X ATS in Australia

Instinet to launch Chi-X ATS in Australia

Interagency broker Instinet is gearing up to launch its Chi-X alternative trading system in Australia which will compete with services provided by the Australian Stock Exchange (ASX).

Nomura subsidiary Instinet says the Chi-X Australia system will offer high-speed, low-cost trading for ASX-listed equities. The platform will be based on the same technology and pricing model as the MiFID-compliant Chi-X Europe system and the Chi-X Canada ATS which is expected to launch later this month.

In addition, Instinet says it creating a holding company, called Chi-X Global, for the operations of its Chi-X platforms in Europe, Canada and the Asia Pacific region, which will be headed by Tony Mackay.

Mackay joined Instinet in 1995 and has held several positions, including president and managing director, Instinet Asia, and most recently president and managing director, Instinet Europe.

Commenting on the move into Australia, Mackay says demand exists from both domestic and non-Australian investors to provide the Australian market with the speed, functionality and cost benefits that a platform like Chi-X offers.

"Chi-X Australia will provide a much-needed alternative - and if history in other markets is an indicator, new liquidity - to the Australian marketplace," adds Mackay.

The European arm of Chi-X has proven remarkably resilient in competition with establised incumbents. Monthly market stats issued by Chi-X indicate that the platform is succeeding in attracting a significant minority of trading in the largest shares listed on the Dutch and German stock exchanges.

Instinet says it is currently in the process of applying for the necessary regulatory and legislative approvals for the launch of Chi-X Australia.

Last year the Australian Securities and Investments Commission (ASIC) launched a consultation into whether it should grant market licences to Liquidnet and to AXE, an ECN that is being established by NZX in partnership with Citigroup, CommSec, Goldman Sachs JBWere, Macquarie Bank and Merrill Lynch.

Liquidnet and AXE have applied to set up rival platforms for trading ASX-listed securities in a move that could break the ASX's monopoly on trade in the country's biggest companies.

ASIC launched an initial consultation in July and released a second consultation paper in November. The second consultation period closed on 29 January 2008.

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