A new European equities trading platform backed by a group of investment banking heavyweights began operating on Friday, piling further pressure on the London Stock Exchange PLC and other traditional European bourses. Turquoise began trading with just five stocks each from Britain and Germany, but it expects to offer some 1,300 of Europe's biggest shares across 13 countries by its official launch in early September. Aiming to grab some 5 percent of the LSE's trading base within months of the launch, Turquoise joins a host of trading venues that have been created since changes to European Union laws late last year. The new regulations, which aim to transform Europe's equity markets from local businesses into a single market, have encouraged banks to set up their own shops to avoid the hefty fees charged by exchanges like the LSE for execution of trades. The nine owners of Turquoise - BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Societe Generale and UBS - are among the exchange's biggest customers. The LSE recently cut its commission rates after new entrants, Japanese investment bank Nomura Holding Inc.'s Chi-X and Plus Market, started to steal its customers. Chi-X alone has taken about 10 percent of the trade in blue chip stocks in recent months. Nasdaq OMX Inc., which is due to launch its pan-European platform for trading in blue chip stocks in September, expects to have 5 percent of the market within a year, and 20 percent in the longer term. US-based trading system BATS will set up its BATS Europe unit in November, while another group of investment banks - including many involved with Turquoise - has set up a trade reporting system called BOAT. To meet the competition, the LSE announced plans in June to create a pan-European trading facility with brokerage Lehman Brothers to offer a “dark liquidity pool,” a trading platform where banks, hedge funds and institutional investors can trade large blocks of shares in secret. Despite its repeated claims it is ready for the competition, the impact of the new platforms is evident in the LSE's share price - the stock has lost almost two thirds of its value since the start of this year. London-based Turquoise, whose chief executive Eli Lederman says is “here to shake up the market” will offer both “light” and “dark” trading. Trading began on Monday with stocks including Siemens AG, Allianz SE, Vodafone Group and Royal Dutch Shell. With around 50 members so far, London-based Turquoise will from next month cover Austria, Belgium, Denmark, Finland, France, Germany, Ireland, the Netherlands, Norway, Portugal, Sweden, Switzerland and Britain.
