(Bloomberg) — London Stock Exchange Group Plc has entered the competition to build a not-for-profit European dark pool backed by a consortium of banks and asset managers.
LSEs Turquoise division now appears on Plato Partnership Ltd.s website of the firms vying to supply the dark pools technology. It will compete against companies including Bats Global Markets Inc., Aquis Exchange Ltd. and Nasdaq OMX Group Inc. Although seven companies appear on the list, one of them — Cinnober Financial Technology AB — has already been rejected, according to people familiar with the matter, who asked not to be named because the selection process is private.
Market professionals are watching the selection process because it will provide clues as to Platos plans, much of which remain unknown. Its choice of a traditional exchange or a venue whose stakeholders are major banks could have implications for the not-for-profit ventures stated ideals, which include a commitment to a balanced partnership between investors and banks.
As much as the process can be as transparent as possible or as clear as possible to the underlying individuals, that will generate more trust in the system, said Rebecca Healey, market structure analyst at Tabb Group LLC in London. We have to recreate a level of trust in capital markets. That has to start from the market participants themselves.
Rolets Pitch
The chief executive officer ofLSE, Xavier Rolet, personally attended a meeting to pitch Plato on the merits of selecting Turquoise, according to people familiar with the discussions who asked not to be identified because the discussions were private. Representatives forLSEand Plato declined to comment. Veronica Augustsson, the CEO of Stockholm- based Cinnober, which doesnt run its own market, also declined to comment.
Banks including Goldman Sachs Group Inc. and Deutsche Bank AG have stakes in Turquoise and are also backing Plato. The not- for-profit dark pool plans to use the money it makes to fund academic research into markets. The venue will help investors trade large blocks of stocks — something that Turquoise has also focused on.
