Turquoise share trading platform rumoured to be for sale

Share trading facility Turquoise, one of the new breed of trading platforms that have risen to challenge the London Stock Exchange, is up for sale, according to reports in The Financial Times.

The banks that own the trading platform have appointed UBS to find a better price after an initial approach earlier in the summer from Nasdaq-Omx, the US exchange group.

European deregulation led to a number of "multi-lateral trading platforms" or MTFs, being set up over the past two years. Turquoise was established last September and is the second most successful, with 5.5 per cent of European equities trading, compared to Chi-X which holds around a 15 per cent share.

The platforms are essentially technology companies, and compete to have the fastest systems to complete trades.

The have forced incumbents such as the London Stock Exchange (LSE) to cut prices and invest in new technology to compete. The LSE has been forced to look at replacing its £40m TradElect trading engine as its new rivals deliver sub-millisecond transaction speeds.

The FT report suggests Turquoise could be sold for between £25m and £50m.

Turquoise is owned by BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Société Genérale, and UBS.

David Easthope, a senior analyst at Celent, a US-based financial research and consulting firm said that Turquoise could lose business if these firms lose their controlling interest.

"What is uncertain is what amount of liquidity will remain at Turquoise if the consortium dealers have a reduced incentive to route orders in the direction of Turquoise with ownership reduced," he said. "No doubt, some incentive structure might be discussed with a new owner."