The London Stock Exchange's decision to change its tariff structure in a bid to win back high-frequency traders just months after scrapping an earlier scheme has been ridiculed by rival outfit Bats Europe.
The LSE has been rapidly losing market share to newcomers such as Bats, Chi-X and Nasdaq OMX over the last two years following the introduction of MiFID. The London bourse now regularly attracts just half of trading in FTSE 100 shares.
In September the exchange abandoned maker-taker pricing - which saw high-frequency traders receive rebates - just a year after introducing the system.
At the time LSE chief Xavier Rolet said: "Maker-taker pricing relies on the concept that posting a passive order is a superior, more valued kind of liquidity. We believe that passive and aggressive orders are equally valuable. We do not want to favour one type of client over another."
However, with high-frequency trading becoming increasingly prevalent, the bourse has now quickly moved to tweak tariffs again with a "pilot pricing promotion designed to encourage tighter spreads, greater depth of liquidity and improved execution likelihood on the order book".
Bats Europe claims it is "intrigued" by the new pricing schedule. "We wonder how trading firms will decide which favoured desks can take advantage of the "Liquidity Provider Scheme", a benefit LSE members are prohibited from passing on to their customers. Contrast this with the fairness of the Bats Europe pricing schedule, where all passive orders receive the same rebate," says a statement.
The upstart also mocks its rival's technology platform, noting the LSE "must must keep TradElect limping along for its final few months".
The London exchange is set to shift UK cash market trading from the TradElect system to Millennium Exchange in September this year. The new trading and information system will replace the three-year old TradElect platform with the aim of slashing trading speed from 2.7 milliseconds to less than a millisecond.