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Best Equities Trading Platform
It has been a make-or-break year for Aquis, the equity trading platform founded by industry veteran Alasdair Haynes in 2013 with the backing of the Warsaw Exchange and several high-profile individual investors. It came to market with a novel subscription pricing model and initially struggled to build a meaningful level of market share. However, It responded in February 2016 by limiting the way proprietary trading firms can use the platform – often regarded as critical participants on lit markets. The rule change means proprietary trading firms can only post passive orders, which are typically placed by market-makers to populate an order book and provide liquidity, rather than aggressive orders. It was a bold move that seems to have paid off, helping Aquis’s market share of European equity trading by value of shares traded to double to over 1%. The venue’s higher volumes have, in turn, led to new brokers, banks and proprietary trading firms committing to join the platform as members.
Bats Europe has remained Europe’s largest equity trading platform over the past year by value of shares traded and estimates that 40% of all equity trades in the region are either reported or traded on the venue. Despite handling such vast amounts of trade its platform has remained highly resilient. On June 24, when the UK’s decision to leave the EU was announced, the platform handled trades worth €29.3 billion. It was an all-time record but the platform didn’t flinch. Mark Hemsley, its chief executive, said on the day the exchange was operating ‘well within the capacity we have available’. Living up to its mantra of ‘making markets better’, the platform has not stood still and has been putting in place the final pieces of its strategy for incoming rules under the EU’s revised Markets in Financial Instruments Directive. It launched an order book in October 2015 that runs auctions throughout the day in an attempt to lure larger trades and has teamed up with US-based Bids Trading, a block trading specialist, for a large-in-scale trading platform.
Liquidnet, an equity trading platform with a membership base comprised mainly of buyside firms, has a block trading business that has long been the envy of other market operators. The second quarter of 2016 was its record period ever by principal traded, as it was boosted by volumes in the wake of the Brexit vote. A key driver of growth in the past 18 months has been its algorithmic agency broking offering, led in Europe by former Citigroup equities specialist Chris Jackson. It has also had some early success with a service it launched in May 2016 called Targeted Invitations. The service enables its buyside members to send actionable indications of interest to other eligible counterparties in a highly secure environment.
London Stock Exchange
That the LSE runs the largest trading venue for the trading of UK stocks is a fact sometimes lost amid the transformation of the UK exchange house into a global, wide-ranging financial services group on the watch of CEO Xavier Rolet. However, its SETS market is still a major force and it has been one of the most innovative markets over the past year. In March, it introduced a two-minute midday auction after an extensive period of consultation with its members and the industry at large. It was always a risk to break continuous trading during the middle of the day, but the move mirrors similar auctions operated by Deutsche Börse and was an attempt to win back larger trades favoured by buyside firms during a traditionally quiet period of the day. Initial volumes have been promising and the move has been backed up by other efforts to encourage block trades, including the revival of a little used large-in-scale order type.
On several days this year, the pan-European trading platform Turquoise has transacted higher volumes than that of the main UK equity market of the London Stock Exchange, which has a majority stake in the platform with a consortium of 12 banks holding the remainder. The platform, led by the irrepressible Robert Barnes, now accounts for over 13% of all European equity trading, compared with around 8% a year ago. Barnes puts its success down to efforts to raise its visibility and widen its membership, particularly in continental Europe. Its volumes have also been boosted from new initiatives including its block order service, which is attempting to tap into buyside demand for larger trades. Users also praise innovations in its dark pool offerings, including Uncross, a system of randomised auctions, as well as order matching on a size priority.