MTFs ally to end dependence on LSE data

Alternative exchanges gang together to reduce their reliance on the London Stock Exchange

LONDON – Rival multilateral trading facilities (MTFs) Turquoise, Chi-X and Nasdaq OMX have learned from their collective failure to take full advantage of the systems outage at the London Stock Exchange (LSE) earlier this month, due to their trading platforms’ reliance on LSE reference data.

The three MTFs have joined in a “loose alliance” to form an informal working group to explore alternative market data and reporting services, challenging those provided by the LSE. Bob Greifeld, chief executive officer of OMX says, “it will not be too difficult to come up with a market-based solution”.

The exchanges’ move also reflects opinion that, since the introduction of the European Union’s Markets in Financial Instruments Directive, there has been a fragmentation not only of Europe’s equity market, but also in market and pricing data.

The US operates a central system for aggregating price reporting, known as ‘consolidated tape’. However, the LSE says comparable systems already exist in the EU through Bloomberg and Reuters market data services.

The LSE was last week taken to the UK high court by Plus Markets – a quote-driven alternative investment trading system – over claims regarding rules that require trades on other exchanges to be reported to the LSE.