Turquoise (exchange)

Turquoise (exchange)
Name	Turquoise
Type	Multilateral trading facility
City	London
Country	United Kingdom
Founded	2008
Owner	London Stock Exchange Group (as of 2009)
Currency	GBP, EUR, USD
Products	Equity trading, FX services, dark pool

Turquoise (exchange) Turquoise is a London-based multilateral trading facility established to provide pan-European equity execution and ancillary services for investment firms, broker-dealers, and institutional investors. Launched in 2008 with an emphasis on low-latency execution and lit market innovation, Turquoise operated alongside market infrastructures such as the London Stock Exchange, NYSE Euronext, and NASDAQ OMX Group within the post-2007 financial market landscape. The venue interacted closely with regulatory regimes shaped by instruments like the Markets in Financial Instruments Directive and authorities including the Financial Conduct Authority and European Securities and Markets Authority.

History

Turquoise was created in 2008 by a consortium including BATS Global Markets, ITG, J.P. Morgan, Morgan Stanley, Goldman Sachs, Credit Suisse, Deutsche Bank, UBS, Citi, Barclays Capital, and Nomura to offer pan-European trading alternative to incumbents such as the London Stock Exchange Group and Deutsche Börse. Early milestones included the launch of lit order books and a dark pool amid competition with venues like Chi-X Europe and Turquoise Europe. In 2009 the London Stock Exchange agreed an acquisition and strategic partnership with Turquoise, integrating operations with exchanges such as Borsa Italiana and deployments in markets influenced by MiFID reforms. Subsequent developments saw technology partnerships with firms like Millennium IT and NYSE Technologies, and commercial interactions with market participants including State Street, BlackRock, Vanguard Group, Deutsche Bank AG, HSBC, RBC Capital Markets, and Morgan Stanley Investment Management.

Ownership and Organization

Ownership evolved from the initial banking consortium to majority control by the London Stock Exchange Group following the 2009 transaction, aligning Turquoise with other LSEG entities including Turquoise Global Holdings structures and operations adjacent to Turquoise Derivatives. Governance involved boards and committees comprising representatives from trading firms such as Instinet, Susquehanna International Group, Panmure Gordon, Cantor Fitzgerald, and Jefferies, alongside oversight from regulatory bodies like the Prudential Regulation Authority for certain connected activities. Corporate organization included business lines covering execution services, market data sales, connectivity, and client relationship management involving firms like Refinitiv and Bloomberg L.P..

Trading Platforms and Services

Turquoise provided multiple execution venues: lit order books, a displayed order book called Turquoise Lit Book, dark liquidity through Turquoise Plato Dark, and reference price mechanisms similar to those used by Chi-X and BATS. Services extended to sponsored access, sponsored trading, and algorithmic execution used by firms such as Goldman Sachs International, Morgan Stanley & Co. International, J.P. Morgan Securities, and UBS Investment Bank. Ancillary offerings included market data feeds consumed by Shareholders, Actis, Man Group, and Schroders, and post-trade services interoperable with clearing houses like LCH.Clearnet and central counterparties influenced by European Market Infrastructure Regulation.

Regulation and Compliance

Turquoise operated under the regulatory umbrella shaped by MiFID II implementation, interaction with the Financial Conduct Authority, and coordination with the European Securities and Markets Authority on cross-border supervision. Compliance frameworks addressed best execution rules promulgated by CitiGroup-related policy debates and enforcement trends involving authorities such as the Serious Fraud Office in the UK and enforcement offices across France and Germany. Surveillance and reporting systems integrated technology from vendors such as Nasdaq OMX Technology and Thomson Reuters to meet transaction reporting obligations in coordination with entities like Euroclear and Clearing House Interbank Payments System participants.

Market Structure and Products

Turquoise’s market structure featured displayed continuous trading, periodic auctions analogous to those on the London Stock Exchange Main Market, and non-displayed execution designed for large orders comparable to dark pools operated by Liquidnet and ITG Posit. Product offerings included trading in FTSE 100 and Euro Stoxx 50 constituents, exchange-traded products similar to those on Deutsche Börse Xetra and Euronext, and currency-denominated listings in GBP, EUR, and USD used by asset managers such as BlackRock, Legal & General, Aberdeen Asset Management, and Invesco. Liquidity providers included bank and non-bank market makers such as Flow Traders and Jane Street Capital.

Technology and Connectivity

Turquoise invested in low-latency matching engines and colocation services comparable to infrastructure used by BATS Global Markets and NYSE Arca, with network connectivity via vendors such as Equinix, BT Radianz, Interxion, and LINX. Market data distribution used protocols supported by SIX Group-compatible feeds and FIX connectivity common to Instinet clients. Technology partnerships and upgrades involved collaborations with MillenniumIT, Itiviti, Cobalt, and cloud or hosting arrangements referenced by Amazon Web Services for non-core systems, aligning with industry resilience practices promoted by Bank of England and European Central Bank guidelines.

Notable Events and Controversies

Notable events included the 2009 acquisition by the London Stock Exchange Group, debates over fee structures and maker-taker models contested by participants such as Citadel Securities and Virtu Financial, and regulatory scrutiny around dark pool transparency raised by firms including Bloomberg L.P. and The Wall Street Journal. Technical incidents and market disruptions drew comparisons to outages affecting venues like BATS and Nasdaq, prompting reviews by the Financial Conduct Authority and parliamentary inquiries involving the UK Treasury. Competitive tensions with Chi-X Europe, Turquoise competitors, and consolidation trends culminating in mergers and acquisitions involving Deutsche Börse and NYSE Euronext shaped the dialogue on market fragmentation and best execution in forums attended by European Commission officials and industry associations like the European Securities Forum.

Category:Stock exchanges in the United Kingdom