Aquis Exchange, the subscription-based exchange which launched in 2013, is giving members cheaper access to closing auctions across Europe and helping them avoid volume caps under new trading regulations.
Aquis exchange said in a statement it will will introduce a Market at Close (MaC) order type to allow members to enter orders for matching on its platform at the closing price of the end-of-day auction on the underlying exchange where the stock is listed.
The new order type will be free to the top-tier subscribers at Aquis, whereas exchanges' fees increase by between 50% and 100% during the minutes of the auction.
Approximately €1.2 trillion, or 20% of all trading in Europe each year, is conducted in closing auctions according to Aquis.
Alasdair Haynes, chief executive of Aquis Exchange, said in a statement: “While MiFID I paved the way for new venues to compete against the trading monopolies held by national exchanges, the closing auctions had remained virtually unchallenged.”
Under MiFID II there are restrictions on the amount of shares that can be traded in dark pools, which could make it harder for fund managers to trade large blocks. The MaC order type avoids these volume caps as trading will be on lit venues and meet all pre- and post-trade transparency requirements.
Last year the London Stock Exchange said it would be launching a new auction at noon every day in 2015 for the largest and most liquid shares traded on its markets to help asset managers execute larger blocks.The new auction will match the current intraday auction in Germany.
Brian Schwieger, head of equities, London Stock Exchange said at the time: “We are aware that institutional investors hope it will encourage European markets to follow suit, creating over time a significant and harmonised pan-European focus for liquidity at midday across the continent.”
A London Stock Exchange spokesman said the midday auction is scheduled to go live later this year.
Aquis’ new order type is supported by a number of asset management and brokerage firms including Legal and General Investment Management, Instinet and Societe Generale.
Richard Hills, global head, PT and electronic trading at SGCIB said in a statement: “We are fully supportive of the Aquis initiative and will follow its development with great interest.”
Aquis launched in November 2013 using a subscription model in which members are charged a fee according to the message traffic they generate, instead of the traditional percentage of the value of each stock that they trade. This makes it cheaper for small firms while top-tier subscribers have unlimited capacity to trade subject to a “fair usage” policy.
When it started Aquis offered trading in the largest UK, French and Dutch stocks and Germany was added in January 2014. Another eight countries were added in June last year.
A year after launch, the value of shares traded on Aquis in November 2014 was €1.27bn and the volume traded was 165,260,458 shares according to its website.
Three months later, in February 2015 the value traded had doubled to €2.53bn and the volume had risen by 50% to 248,251,372. On February 19 Aquis tweeted it had more than 3% market share of trading in Switzerland's top 20 group of stocks for the first time.
Featured image by /Dollar Photo Club