Tradepoint throws down gauntlet
Tradepoint, which plans to be the world’s cheapest stock exchange, has taken a big step towards the launch of its pan-European equities exchange later this year by appointing the London Clearing House (LCH) to clear, and the Euroclear Operations Centre in Brussels to settle, trades on the exchange.
Chief executive Richard Kilsby says this combination will create a market that “will simplify the process of European equity trading and settlement”. It will also offer significant cost advantages to our members and reduce the risks of cross border trading.” He adds: “Tradepoint is in a very strong position to realise its goal of establishing the first truly pan-European equities exchange.”
Using the approach based on its model in the UK enables its 100 plus members to execute, clear and settle trades using a straight-through processing system. LCH, which acts as central counterparty for trades of its members on a number of London exchanges including LIFFE, the London Metal Exchange, the International Petroleum Exchange, as well as Tradepoint. When registering matched trades, LCH acts as principal to the contract to ensure performance.
The industry standard of trade date plus three in the Euroclear system will be followed. Netted instructions settled on a book-entry basis within the system will reduce costs significantly, it is claimed. The LCH clearing and Euroclear settlement platforms will form the backbone of the new European trading platform, based on Tradepoint’s existing electronic order book. Trades can be placed between 07:00 and 17.30 with orders being posted anonymously and then matched in price/time priority on a automatic basis.
The new facility is expected to be operational in the last three months of the year with trading in the top 300 to 400 European equities by market cap.
Tradepoint which is majority owned by a consortium of international broker dealers and asset managers including ABN Amro, Credit Suisse First Boston, Deutsche Bank, Dresdner Kleinwort Benson, Instinet, JP Morgan, Merrill Lynch, Morgan Stanley and Warburg Dillon Read. As a recognised investment exchange in the UK, it accepted throughout Europe as a regulated market.
The consortium says it expects that the resulting consolidated exchange will turn out to be the principal marketplace both by volume and price formation for the trading of the top 300 European stocks by the end of 2001. Fennell Betson