Alternatives Need a Bigger Umbrella?
May 19, 2009
Interesting article in the FT today about why the US exodus from traditional exchanges might not be repeated here in Europe, which is contrary to the recent marketing mantra of the alternative trading venues such as Chi-X, Turquoise and Equiduct. If correct, the economics outlined in the article look justifiably prohibitive:
"Merely to break even, an alternative platform with a cost base of about €10m would need to do 100m trades a year. Quite a task, given that the 208-year-old London Stock Exchange, which reports full-year figures on Wednesday, said in March it was on course for about 190m in its UK orderbook."
The article points out the difficulty of starting an alternative trading venue against a dire economic background and emphasises this by ending with:
“Xavier Rolet, the LSE’s new chief executive, should be praying for rain.”