News | Equities UBS makes a splash in Spain
UBS MTF, one of Europe’s largest broker-run dark pools, has made its debut in Spain, a market that until recently has kept its doors shut to alternative venues. It is not the first one to dip its toe in but joins fellow trading platforms – BATS Chi-X and London Stock Exchange owned Turquoise – who are also hoping to make their mark. Competition among trading
platforms in the country had been limited because of the regulator’s reluctance to embrace MiFID as well as the country’s complex and expensive post-trade processing rules. These effectively required all trades to pass through the Bolsas y Mercados Españoles. Regulators loosened their grip which resulted in the country’s equity landscape emulating the
rest of the region. It also meant that its national exchange has lost ground to these alternative venues.
Recent figures from Thomson
Reuters show that the BME has seen its share of equity trading fall from 92.5% at the start of the year to 80.21% at the end of June. The dark pools analysed by the information group accounted for 2.6% of overall trading in Spanish stocks in June compared to 1.2% in February. Dark trading represented 4.4% of overall trading in EU-listed equities. Alternative venues also
benefited from the end of a short selling ban in the country on 31 January. Introduced in July 2012, the aim was to not only restrict speculative trading activity but also curb the ability of market makers to provide short-term liquidity. The practice is to borrow shares, sell them and then buy them back at a lower price in the future. This allows market makers to manage the risk they take on from supplying continuous bid and offer quotes to the venues they operate on. These firms are prevalent and comprise the majority of trading activity on many of these platforms. Future prospects look good if
Richard Semark, CEO, UBS MTF 8
recent results from BATS Chi-X are anything to going by. The
firm recently announced record results, racking up a market share of 14.4% for Spain’s IBEX 35, as well as a one-day record of 19.5%. Overall, it has seen substantial growth in the country in the past twelve months, accounting for just 5.2% in June 2012. n
Best Execution | Summer 2013
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