LSE rival Turquoise set to go live in September

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The Independent Online

The next wave of trading platforms designed to poach market share from the London Stock Exchange will go live in three months.

Turquoise, the venue backed by nine major investment banks, will go live on 5 September, Eli Lederman, its chief executive, said. This means the venue will start operating less than two years after the idea was first mooted.

Mr Lederman, a former Morgan Stanley managing director, said the platform will offer clients access to trading in 300 stocks in 14 European markets. This will follow an initial "soft launch" in mid-August, covering 70 stocks. Executives at the group have previously said they expect to attract 5 per cent of European trades when Turquoise goes live.

Turquoise is one of three alternative trading venues launching in September, while another rival has already launched, leaving analysts in no doubt that the pressure on the LSE is set to increase.

The UK market announ-ced strong annual results last month but shares dropped after it failed to provide a detailed response to the forthcoming competition. After Turquoise, the US trading platform BATS and Nasdaq OMX are pre-paring to launch alternative venues in September. This follows the emergence of Chi-X, which was set up by Instinet last year. Chi-X has already made inroads into UK trading volume.

Mamoun Tazi, analyst at MF Global Securities, said: "The LSE used to have 99.9 per cent of the market in trade reporting and order book flow. They have already lost market share with Chi-X's emergence, and that will intensify with the launch of the other three."

The LSE said at the time: "Through our continuous investment in technology, development of a range of new market services and a tariff schedule structured to incentivise growth, we believe the exchange is well positioned."

The new platforms are hoping to break the stranglehold of the exchanges across Europe, including Deutsche Börse in Germany and the pan-European NYSE Euronext. One source close to the alternative traders said: "It's not just the LSE that will be affected – the European incumbents could potentially be hit worse. The LSE has seen this coming and has reacted."

The emergence of the rival platforms was sparked by companies complaining over the cost of trading in Europe. Turquoise added that its actual launch was enabled by the advances in trading technology systems and the enacting of some critical European Union legislation last year.

The Markets in Financial Instruments Directive, more commonly known as Mifid, was a key part of the EU's Financial Services Action Plan and it expects brokers to find the best price for clients when trading.

The plan to launch Tur-quoise emerged in Nov-ember 2006, with the plan to set up a platform to provide dealing at a 50 per cent discount to the traditional exchanges. The banks backing the platform are BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Société Générale and UBS.