Instinet announced a consortium of 13 banks and trading firms have taken a minority equity stake in its Chi-X Europe multilateral trading facility (MTF).

“Instinet’s intention from the start was to allow liquidity providers to take an equity stake in Chi-X Europe,” says Tony Mackay, president and managing director of Instinet Europe Limited. “This model of joint ATS ownership between the platform operator and major liquidity providers has proven particularly successful in the U.S. and we anticipate today's agreement will be beneficial to all parties involved.”

The consortium included BNP Paribas, Citi, Credit Suisse, Fortis, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley, Société Générale, UBS, Citadel, Optiver, Getco Europe.

Mackay would not say whether the consortium members had agreed to dedicated any amount of order flow through Chi-X but says, “most European dealers that trade Blue Chip U.K., French, Dutch, German and Swiss stocks are already accessing the better prices available on Chi-X Europe.”

He adds that at this point liquidity on Chi-X Europe is, “a healthy mix of orders from Europe, the U.S. and Asia, which is indicative of the current state of trading where most funds, regardless of their region are global in nature.”

As for potential competition from other MTFs, Mackay points to the ECN proliferation of the 90’s, which led to dramatic U.S. equity volume increases. “If history continues to repeat itself in Europe, the new liquidity created should be more than enough to support multiple MTF entrants,” he adds.

Next month Instinet will take the model to Canada with the launch of its Chi-X Canada offering. “While developing Chi-X Europe Instinet solicited feedback and advice from many of the firms that are now shareholders, which is the same approach we are taking with Chi-X Canada,” says Mackay. “As such, this deal more than anything formalizes our relationships with the consortium members.”

This is a public forum. CMP Media and its affiliates are not responsible for and do not control what is posted herein. CMP Media makes no warranties or guarantees concerning any advice dispensed by its staff members or readers.

Community standards in the message center do not permit hate language, excessive profanity, or other patently offensive language. Please be aware that all information posted to this forum becomes the property of CMP Media LLC and may be edited and republished in print or electronic format as outlined in CMP Media's Terms of Service.

Important Note: The Message Center is NOT intended for commercial messages or solicitations of business.