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Jared Dillian
Traders Magazine Online News

Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

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March 1, 2003

Swiss Take Command, Dream of Euro Trading

By Staff Reports

The dream of a pan-European trading platform appears to have been achieved, but will it turn out to be a nightmare?

The SWX Swiss Exchange's takeover of Virt-x - along with its bold announcement that it is going to promote the Virt-x European platform at least for another year - has sparked a debate.

Is SWX's move premature or is its step coming at just the right time to take business away from established exchanges? Even some of the advocates of the pan-European exchange agree that timing could be a problem.

Lee Hodgkinson, director of operations at Virt-x, said it could have been different had Virt-x launched three years earlier, rather than in the middle of a market downturn. But Hodgkinson still thinks the pan-European idea is on target. That's despite Virt-x not having reached its early goal of 10 percent in European blue-chip trading volume. Hodgkinson contends that the migration of a Swiss national market is a signal event. It had never previously been attempted.

Skeptics claim that the acquisition proves that the Virt-x model is in trouble.

Alasdair Haynes, CEO of ITG Europe, which operates the POSIT crossing network in Europe, said that a new Virt-x entity won't survive today unless value is added. He said drawing liquidity from a national exchange is difficult.

SWX took control of some 90 percent of Virt-x recently, which was originally launched as a joint venture between Tradepoint and the Swiss exchange. Shareholders, which include a consortium of leading investment banks and securities holders, agreed to an offer of 12.5 pence per share from the Swiss exchange. The latter is delisting Virt-x shares from the London Alternative Investment Market and will acquire the outstanding shares.