Thursday, October 25, 2007

Project Turquoise gets its act together, or does it?

Well it seems after much speculation that it would not get off the ground, Project Turquoise, the multi-lateral trading facility announced by seven leading investment banks, has appointed a CEO and technology provider.

There were rumours that Project Turquoise may buy PLUS Markets, a London-based quote-driven electronic trading platform based on OMX technology in a reverse takeover. But after that deal fell through, it selected Cinnober Financial Technology, a Swedish company which also provides the technology for BOAT, the pre- and post-trade market data consortium, as its technology provider.

It has also finally appointed a CEO, Morgan Stanley managing director Eli Lederman. But in an interview with Reuters, Lederman said Project Turquoise's launch would be pushed back from November this year to next summer, giving NYSE Euronext, BNP Paribas and HSBC time to launch its SmartPool for trading so-called "dark" liquidity pools anonymously.*

The delayed launch of Project Turquoise also continues to stoke the rumour mill that it may still not manage to get off the ground.

A shorter time to market would have been preferable if Project Turquoise was to finally silence its critics and start competing with the likes of Chi-X, which is already capturing significant market share in trading of some major blue chip European stocks.

But with other MTFs gradually coming on line, it is unclear how long Chi-X will enjoy first mover advantage and what trading models or technologies are likely to gain the upper hand in the battle for liquidity.

It is reminiscent of the battle between American ECNs at the onset of the millennium, but look what happened to them. They consolidated and eventually got bought by the exchanges they competed with.

Are Chi-X, Project Turquoise and SmartPool destined for the same fate?

*PS For any of you who have ever wondered why liquidity pools are often referred to as being 'dark'. Well apparently, according to one knowledgeable insider, they are 'dark' because when you switch the lights on, there is nobody inside of them.

1 comment:

Anonymous said...

It would be nice to see Eli Lederman interviewed on the new Algorithmic Trading Podcast series. It's done by the same firm who did which was a great series.