Equiduct, a new organisation created to provide MiFID solutions on its Belgian-regulated electronic platform, has announced that the first of its range of pan European pre- and post-trade services will go live as of Q2 2007 (subject to regulatory approval and customer readiness). Equiduct offers the first MiFID-compliant, integrated Europe-wide single connection for trading services and execution. The company’s wide range of services will be offered to all financial institutions via its own pan-European regulated exchange or as a white label product to systematic internalisers or financial institutions who intend to operate their own trading facilities. Equiduct’s goal is to help organisations cut the cost of MiFID implementation and take advantage of new MiFID-enabled business opportunities.
Equiduct differentiates itself from other platforms through its complete range of service offerings, which include pre- and post-trade transparency, a hybrid book, a quoting facility and a provable best execution capability for equities. Equiduct’s services are based on an upgraded version of the proven exchange technology platform that was used in production by NASDAQ Deutschland and NASDAQ Europe and subsequently licensed to NASDAQ US. Through Equiduct, organisations will be able to use a single pan-European exchange - rather than having to trade in all 29 national exchanges - effectively delivering on MiFID’s key goal of making Europe’s trading venues more liquid and transparent. Equiduct has been developed to directly address the four key requirements of MiFID best execution as defined by the European Commission, namely:- Speed – Equiduct offers class-leading speed with a less than 10 millisecond turnaround time, and is also committed to providing customers with very low latency SLA-backed end-to-end connections
- Cost – Equiduct will reduce costs for connectivity, trading and clearing and settlement
- Likelihood – Equiduct’s unique Market Model provides guaranteed execution
- Price – Equiduct delivers provable pan-European best price.
Equiduct will be headed by Chief Executive Officer Bob Fuller, previously Director of IT Strategy at Dresdner Kleinwort Wasserstein (DrKW) and the former Co-Chair of the MiFID Joint Working Group IT Sub Group. Equiduct’s core IT operations team will be based in London, while its regulatory home will be in Belgium along with its corporate functions and market supervision staff. Dr Jos B. Peeters, President of Easdaq, commented: “We are delighted that Bob has accepted to spearhead our Equiduct initiative. He brings a vast experience with trading infrastructure and the implications of MiFID to the table. Equiduct will be able to capitalise on an upgraded version of the proven exchange technology platform that was used in production by NASDAQ Deutschland and NASDAQ Europe and subsequently licensed to Nasdaq US.”
According to Charlie McCreevy – the European Commissioner for Internal Markets and Services: “MiFID is close. But not close enough. We believe that the scope for competition and innovation that MiFID will generate will be significant and lasting. We are already seeing consolidation moves by exchanges, and new transaction platforms for market players. I look forward to seeing even more creative developments in the wake of the MiFID revolution.”
“With the November 2007 deadline looming, thousands of organisations across Europe are busy working out how MiFID will impact their businesses. We believe that with the introduction of our Equiduct exchange we’re delivering exactly the sort of innovation that the European Commission has been hoping for. With our Equiduct services we can facilitate MiFID compliance by providing a single point of connectivity, and allow organisations to play in the post-MiFID markets without having to make the large investments they would have had to bear individually in order to stay competitive,” commented Equiduct’s CEO Bob Fuller. “MiFID is intended to promote cost effective pan-European trading, not trading in isolated national exchanges. It is our job at Equiduct to facilitate that with a solution that delivers best execution while reducing the overall risk and costs associated with MiFID implementation.”
Commenting on the announcement, Paul Beach, Head of Corporate and Investment Banking at Atos Consulting, said: “it is early days, but I believe that the Equiduct announcement reflects a significant shift in the shape of the European capital markets post MiFID. The original cross-border exchange model is clearly supported by the principles of MiFID, but more significant is the potentially flexible service model which could support other requirements of the MiFID operating model, including trade reporting, price distribution/consolidation and even best execution demonstration. These services would be of interest to banks (individually or in a consortium) and even small exchanges who are faced with potentially significant capital costs for compliance in what could be an increasingly low margin business. It’s possible that these information – or datarelated services – could become even more important than the core exchange execution services.”
“MiFID is likely to result in liquidity fragmentation as happened in the USA. Therefore, to insulate the market against the cost of multiple links by building a hub facility with access to all the pools is good,” added Richard Balarkas, Co- Chair of the Global Steering Committee for the FIX Protocol, and Managing Director, Head of Equity Trading Services at Credit Suisse.
Equiduct’s goal is to offer low-cost and very low-latency capabilities for firms to access all of Europe’s pools of liquidity. For example, a Frankfurt-based broker might have a direct connection to the Deutsche Bourse and then use Equiduct to access the other 28 European exchanges – avoiding the cost of complex infrastructures to connect to all 29 national exchanges. When the complexities of systematic internalisation and Multilateral Trading Facilities are considered, Equiduct provides a compelling alternative and a powerful solution for organisations now looking to buy or build their own MiFID solutions.