State Street joins equity trade platform E-Crossnet
EUROPE – State Street Corp. has become a participant and shareholder in the European equity trading platform E-Crossnet.
E-Crossnet, which allows institutions to trade equities with each other directly, said State Street would be a “powerful catalyst” for extra liquidity. Its crossing volumes rose 50% to 4.3 billion pounds (6.5 billion euros) in 2003.
“We are delighted that State Street is joining E-Crossnet,” said the company’s chief executive Nigel Foster. “More underlying clients than ever will now be benefiting from lower transaction costs and the boost to investment performance that crossing on E-Crossnet brings.”
State Street is part of a deal which has seen a total of 6.3 million pounds raised for the network. Existing shareholders Barclays Global Investors, Legal & General and Merrill Lynch Investment Managers have raised their stakes, though Foster said the transation was not split four ways.
Foster said the company plans to double its volumes in 2004 – and that other major institutions were interested in becoming shareholders, though he declined to name them.
State Street executive vice president Stanley Shelton said the shareholding was under 20%, though he declined to say how much it was paying. Shelton will join the board of the company.
“We’d like E-Crossnet to become the dominant player,” he said in an interview. He said the market structure was changing rapidly, with a greater demand for liquidity without market impact. He said crossing was an underused technique that was both logical and simple – and that there had been a pick-up in interest in the last six to nine months.
State Street was also interested in the deal because of its large transition management business, Shelton said, adding that it was the only such system the bank is involved with.
“We’re a firm believer in the power of crossing,” said Timothy Harbert, chairman and chief executive of State Street Global Advisors, the investment management arm of the bank.
E-Crossnet is an investor-only crossing network for the matching of European equities, set up to cut transaction costs.
The system is chaired by exchange industry veteran Sir Michael Jenkins and backed by 11 UK pension funds and 41 European fund management firms, including ABP Investments. More than 16 billion pounds of European equities have been matched via the system since launch.