Over the last 30 years, trading on stock markets has evolved from human beings interacting on a physical floor to today’s electronic order books.
One trading system at the centre of this technological evolution is Turquoise. It is the trading platform majority owned by London Stock Exchange Group in partnership with 12 global investment banks. This month Turquoise celebrates its tenth anniversary of trading.
Efficient interaction between investors and issuers in the global capital markets has rarely been more critical. The importance of delivering long-term investment returns at minimal cost cannot be over-stated in the context of current low interest rates and uncertain economic growth.
With a single connection to Turquoise, users can trade more than 4,500 securities from 19 major European and emerging markets.
Turquoise distinguishes itself from London Stock Exchange and our sister exchange Borsa Italiana.
Each of these exchanges operate primary markets, on which companies can list securities, and secondary markets, on which investors can trade these securities via respective UK and Italian 'lit' order books.
The closing auction remains the preserve of the primary markets. Turquoise solely operates a market for trading a wide European and emerging market stock universe on a choice of lit and dark order books.
While many people understand the concept of lit order books that show the price and size of orders available prior to a trade, an increasing number of investors are learning how to access the market with complementary trading mechanisms called ‘dark pools.’ This is where firm orders are placed on a regulated order book but the price and size are not displayed until after the trade.
Turquoise’s dark pool, Turquoise Plato, publishes in real time the price and size of a trade after it matches, operating to the highest UK and European transparency regulatory standards. Turquoise Plato plays a significant and positive role for large financial institutions, including pension funds, and therefore private investors, who ultimately invest in these funds.
As investors continually seek better investment returns, it is important too for trading platforms to carry on enhancing and adapting their services.
Over 10 years Turquoise has constantly responded to client needs, adding new asset classes, stock symbols and geographic markets, as well as collaborating with authorities and regulators worldwide to introduce new mechanisms to buy and sell in larger sizes. The breadth of securities traded is staggering.
In 10 years, customers have used Turquoise to match more than €7 trillion of shares, with more than €5 trillion traded in the last 5 years. Almost 3,000 stocks were actively traded in September 2018 on Turquoise versus around 1,600 in the first quarter of 2013. This increasing number of active stocks demonstrates that investors are seeking growth in investment returns, not only through blue chips but also mid and small caps.
These investors are finding liquidity via Turquoise trading mechanisms designed in partnership and used by our community of domestic and international trading members.
Growing interest in emerging markets is reflected further in the widening universe of Exchange Traded Funds and Global Depository Receipts, financial instruments representing shares in foreign companies from countries such as Egypt, India, South Korea and Russia, available to trade on Turquoise.
This year, Turquoise was recognised by Hong Kong and Dubai regulators, allowing local brokers to join our community of international trading members.
A year ago, Turquoise embarked on a strategic initiative to enhance the trading volumes of dynamic mid-tier company stocks quoted on LSEG’s international growth market, AIM. We made the constituents of the FTSE AIM UK 50 index, the fifty largest UK stocks on AIM, including ASOS and Fever-Tree, available to trade on Turquoise.
Investors in AIM 50 securities now have access to the same suite of additional Turquoise execution channels that are available via Turquoise for the biggest UK listed blue chips and mid-caps in the FTSE 100 and FTSE 250.
Investors in these AIM stocks were able to trade an additional €2.2 billion via Turquoise. As a result of customer demand and building on the success of the AIM 50, the service was extended across Europe. In September, Euronext Growth instruments became available to trade on Turquoise, reflecting growing appetite for efficient access to trade small and mid-cap stocks from
the institutional investor community and increased access to high-growth SMEs.
Turquoise has a proud track record of innovation in partnership with our customers and supporting efficient capital markets. Whether it’s through giving our customers access to high-growth companies or facilitating inward investment flows into emerging markets, Turquoise has always been at the vanguard of innovation.
We look forward to what the next 10 years will bring as the macro economic environment, financial markets and investment trends continue to evolve.
For more information on Turquoise please visit: www.tradeturquoise.com and @tradeturquoise
Dr Robert Barnes is CEO of Turquoise