Tradepoint gets lucky as it challenges the titans
Wednesday 14 June 1995
"Innovation always needs a bit of luck. To our immense relief, the lady came riding in on her charger at just the right moment," says Michael Waller-Bridge.
His brainchild, Tradepoint, is all systems go for its launch in August, after receiving authorisation from the Securities and Investment Board to pit the country's first fully-automated, order-driven share dealing exchange against the might of the Stock Exchange and the market-making establishment.
Mr Waller-Bridge, Tradepoint's chief executive, tries to play down the combative overtones - "we must not forget we are the new boys on the block" - but there is no mistaking the view among his institutional backers, including Framlington, TSB and Robeco, or the authorities overseeing the City, that the new exchange marks a turning point.
"Three years ago, when the idea of Tradepoint first did the rounds, people told us to forget it. Then the nods and winks got stronger," says Mr Waller- Bridge. Finally, as preparations for the electronic dealing system neared completion, Tradepoint found regulatory sympathy had shifted dramatically in its direction.
In March, the Office of Fair Trading produced a report highly critical of the special privileges of market-makers and of the restrictive practices of the Stock Exchange. It threw its weight behind calls for the encouragement of alternatives to the traditional British system of market-makers exclusively quoting share prices for trading on the Stock Exchange, saying it wanted to increase the potential for exchanges to compete, and for the market to determine the development of each system.
The SIB's Equity Market Review, to be published next week, is expected broadly to reflect the OFT's call. For Tradepoint, this shift in the regulatory climate is an enormous stroke of luck, for the strength of opposition to the venture from the Stock Exchange and bastions of market-making such as Smith New Court, the brokers, is considerable. But the Stock Exchange is also hedging its bets.
Sequence, its new technical platform from which the trading and information systems are run, also contains a facility for order-driven dealing. "That means we have 18 months to two years to establish our position," says Mr Waller-Bridge.
There will be no privileges for anyone on the electronic system, with dealing anonymous and immediate as buy and sell orders are automatically matched.
Tradepoint expects to start up in August with about 50 participants, dealing initially in the 400 most actively traded securities quoted on the London Exchange. In an effort to overcome the main criticism of order- driven systems, that they cannot guarantee continuous liquidity, pricing will be set to reward people who offer liquidity.
Anyone who shows an open order, either to buy or sell, will get net execution, while the person who comes in to match the order, the "aggressor", will pay the dealing costs. These are estimated to be close to the current rates of inter-dealer brokers or those charged for big institutional investors.
Tradepoint aims to maintain continuous matching of orders in the highly liquid FT-SE stocks, alongside a stacked auction system for smaller stocks.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 Watch: Man takes selfie every mile of 2,600 mile hike, creates amazing timelapse video
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Revealed: Putin's army of pro-Kremlin bloggers
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...