Adrian, I'd like to start by asking about Turquoise's customer demographic. Is there any particular category of trading participant (or combination of categories) that you are keen to encourage?
I think it's a combination and not necessarily a static one either. In the context of equities we are a pan-European platform, so we appeal to firms with pan-European volumes or strategies. Our low latency lit market is relevant to firms that have aggressive strategies (liquidity takers) and are looking to achieve high fill rates when taking prices on the screen. However, that low latency environment is also appealing for those firms that are looking to post prices and need to be able to adjust their quotes quickly in order to manage their risk effectively. For our Midpoint Book, the focus has always been (and continues to be) on agency flow from the large broker community where we have our origins.
Turquoise's relationship with EuroCCP means that we cover a broad range of stocks, and not just blue chips. For example if you look at our market share in European Mid cap stocks we have a significant presence and we are also keen to add more Scandinavian and continental-European participants.
As regards derivatives, the launch of Turquoise Derivatives and its recent acquisition of EDX has given us a strong franchise in Russian and Norwegian products. While EDX has historically been primarily a wholesale and institutional market, it is now receiving increasing focus from proprietary trading firms and we are keen to combine their participation with the existing institutional customers on Turquoise Derivatives. Our expansion into products based on FTSE and other European indices will further expand that customer base.
The interesting opportunity here is that Turquoise already has established relationships with high-frequency trading firms that EDX has not traditionally had or needed because it has effectively been a sort of niche block trading type of business. In the future we see it developing into a high-volume on-screen market, which means that there is a lot of natural synergy and opportunity there between the two categories of participant.
How do you draw the distinction in trading terms between the LSE and Turquoise? Who should use which and why?