New platforms to challenge LSE on reference data

24 September 2008

Chi-X, Turquoise and Nasdaq OMX have joined an informal working group formed by Plus Markets to explore alternative market data and price reporting services to those provided by the London Stock Exchange.

Chi-X, Turquoise and Nasdaq OMX have joined an informal working group formed by Plus Markets to explore alternative market data and price reporting services to those provided by the London Stock Exchange (LSE).

 

According to a Financial Times report the group have formed a "loose alliance" to establish a system that would challenge the LSE's dominance in market data and price reporting.

 

Nasdaq OMX CEO, Bob Greifeld, told FT reporters that it "will not be too difficult to come up with a market-based solution".

 

The move reflect concerns that fragmentation of the European equity market following the introduction of the EU's Markets in Financial Instruments Directive (MiFID) has also resulted in fragmentation of market data and pricing information. Although traders have an increasing number of places where they can source the bid and offer price for shares, not all investors have the data feeds they need for comparative purposes, says the report.

 

The issue came to the fore recently when the LSE's TradElect system was hit by connectivity problems. The majority of traders did not switch to other platforms - such as Chi-X and Turquoise - when TradElect went down because they still rely on the LSE to "provide the most reliable benchmark for pricing", says the FT.

 

In the US there is a central system for aggregating price reporting - known as consolidated tape. But the LSE argues that there is already a form of consolidated tape in the market in the form of data feeds supplied by vendors such as Bloomberg and Reuters.

 

Last week Plus Markets, which operates a quote-driven alternative trading system for AIM-listed stocks, issued proceedings in the High Court challenging an LSE rule which requires trades that are conducted on venues other than the LSE to be reported to the London exchange.

 

Plus said the rule was "archaic, anti-competitive and outside the spirit of MiFID".

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