A move by the London Stock exchange (LSE) to impose a special tariff on equity orders channelled to its market from competing platforms has led to accusations of "anti-competitive behaviour" from rival Nasdaq OMX.
According to a Financial Times (FT) report, the LSE's new tariff hits Nasdaq OMX's MiFID-compliant pan-European trading and routing facility, which launched last week.
Like Turquoise and Chi-X, the Nasdaq OMX Europe platform is looking to steal market share from domestic exchanges in Europe. However the Nasdaq OMX MTF is the first among the upstarts to provide a pan-European order routing service from the platform to other venues across the region. The transatlantic exchange partnered with Citi on electronic routing of orders to other exchanges - including the LSE.
But in response to this the LSE is introducing a way of distinguishing between orders that come straight to its markets and those that are routed from other exchanges, says the FT. The London exchange is planning to charge a higher tariff for order that are routed to the exchange from rival platforms,like Nasdaq OMX Europe.
Charlotte Crosswell, chief executive, Nasdaq OMX Europe, told the FT that the new tariff will hurt competition and is against the principles of MiFID. She claimed the LSE was trying to keep prices high by stifling competition and warned that Nasdaq OMX would ramp up its opposition.
John Wallace from the LSE told the FT that it was right to differentiate between customers and rivals and Nasdaq OMX "appears to think it can avail itself of LSE member firm privileges".
Wallace said there is nothing to stop Nasdaq OMX Europe from competing as a number of new entrants are doing.
Nasdaq OMX is also looking to muscle in on LSE territory in other ways and has filed an application to become a recognised investment exchange (RIE) so it can launch a London listings venue.
In addition, the US-based exchange is joining Chi-X, Turquoise and Plus Markets on an informal working group to explore alternative market data and price reporting services to those provided by the LSE.
Last month Plus Markets, the quote-driven trading system for AIM-listed stocks, filed an action in the High Court claiming an LSE trade reporting rule is "anti-competitive". Plus says it has issued proceedings challenging an LSE rule which requires trades conducted on venues other than the LSE to be reported to the exchange.
Nasdaq OMX slams LSE over tariffs - FT