Former Chi-X CEO to Set Up Rival Trading Venue

on Oct 4, 2012
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Alasdair Haynes, former chief executive of Europe’s largest alternative share trading venue Chi-X, is preparing to launch a new pan-European stock trading system, which will compete head-on with his former employer and other traditional exchanges, The Financial Times reported on 1 October 2012.

Haynes left Chi-X Europe last year after the US-based share trading venue Bats Global Markets purchased the company in a $300 million deal, ending a two year stint during which Haynes oversaw its move from a subsidiary of Instinet to an independent company. The merger of the two major trading venues also helped consolidate a market which had previously seen a flurry of rival venues emerge after in 2007 the European Union’s Markets in Financial Instruments Directive started promoting competition to national exchanges by allowing the creation of alternatives. Many of the new platforms have since merged, shut down or been bought by rivals. As a result, Bats Chi-X is currently the dominant player in the industry with around 19 per cent share of pan-European trading. While a number of other platforms also provide trading in European stocks, the split remains between Bats Chi-X and the region’s incumbent local exchange index. Haynes, however, has ambitions to break this current “duopoly” of the market.

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!m[](/uploads/story/521/thumbs/pic1_inline.png)The former Chi-X CEO will launch a new trading platform, called Aquis Exchange, which will be based in London and will offer trading in more than 1000 European stocks. The rival venue will not use the controversial so-called “maker-taker” business model that underpinned Chi-X’s growth. Using it, venues typically use volume discounts to attract business. Traders who place orders on their platform in the expectation of a match being found are offered rebates while the venue also charges fees for traders who enter to find a match. The model often appeals to high-frequency trading firms, who harvest rebates rewarded to them for posting orders. Instead of this “make-taker” business model, Aquis Exchange will use its own strategy.

Belinda Keheyan, formerly head of marketing at Chi-X Europe and head of marketing at Aquis, revealed that the new platform will offer “co-location services”, enabling customers to place servers near an exchange’s systems. The setup will allow firms to reduce the time it takes to receive an execution or confirm that their order was cancelled. Aquis will also give traders a choice of who provides clearing services for their transactions. Former Chi-X technology specialists have been hired to facilitate the platform’s launch. Keheryan also said that the funds for the new venture were raised from private individuals.

Aquis Exchange is currently pending regulatory approval by the UK’s Financial Services Authority for a multinational trading facility licence. Haynes expects to launch the platform by the middle of next year. The industry veteran will run the trading system as the company’s CEO. He will be joined by four other former Chi-X employees who will help to build the Aquis Exchange.

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