(Bloomberg) — The owner of Oslos stock exchange is closing a trading venue that failed to gain traction from European regulatory changes that increased regional competition.
Oslo Bors VPS Holding ASA said April 30 will be the final day for Burgundy, a venue for Swedish, Danish and Finnish equities. It bought the market from a group of banks at the beginning of 2013.
A flurry of markets opened after the European Union broke the monopoly of established exchanges in 2007. While Burgundy was one of the first alternative venues, it failed to establish a niche. Over the past week, it handled about 1.1 million euros ($1.2 million) a day of trading, which amounts to 0.00 percent of all European equity volume, according to data compiled by Bats Chi-X Europe.
We have to do some efforts in running a market like Burgundy, and since theres less and less income, we are closing the trading, Per Eikrem, a spokesman for Oslo Bors, said in a telephone interview on Wednesday.
As the exchange operator closes one market it will open another: Oslo Bors will offer members another way of trading Norwegian equities when it starts a dark pool called North Sea on April 20. The platform will use London Stock Exchange Group Plcs Millennium Exchange technology.
Turquoise Uncross
North Sea will be the only venue to use Turquoise Uncross technology apart from Turquoise, according to LSE. The feature randomizes orders in an effort to attract large trades. Another Turquoise feature for big trades, called Block Discovery, wont be available on North Sea.
A group of Swedish banks opened Burgundy in 2009. After they sold it to Oslo Bors for an undisclosed sum, Burgundys new owners noticed that the banks were switching their trading to larger markets, such as Bats Chi-X.
We saw quite soon that the different banks and brokers were not trading so much, Eikrem said. They reduced their activity on that marketplace.
Burgundy is only the latest venue to close. Deutsche Boerse AG shut its Xetra International Market in 2013, while Nasdaq OMX Group Inc. closed its pan-European venue in 2010.
It is continuing to shake out, said Anish Puaar, European market structure analyst in London at Rosenblatt Securities Inc. Its perhaps a reflection of the number of competing venues that firms are willing to support.
Bats Chi-X Europe and LSEs Turquoise are among those that have thrived. Bats Chi-X accounts for 23.5 percent of European equity trading, according to a five-day average compiled by the company. LSE makes up 19.4 percent, and Turquoise a further 8.3 percent.
