Instinet Europe Best Execution Policy Review

Instinet Europe Limited, the European agency brokerage subsidiary of electronic trading and agency-only brokerage services leader Instinet Incorporated, today published the key findings of its Best Execution Policy Review, conducted in accordance with MiFID regulations. The review covers Instinet Europe’s trading performance from 1 May 2008 through to 31 July 2008 (months 7-9 of MiFID) and follows the firm’s published findings of its execution quality from MiFID’s first six months in June.

The key findings are as follows:
• Instinet Europe’s SmartRouter™ has been enhanced to interact with new trading venues as they have been introduced. The average price improvement(1) when trading on new venues was 5.32 bps for the three month measurement period, and consistently improved month over month, rising to 6.43 bps in July 2008 compared with an initial 1.73 bps in November 2007, when MiFID was introduced.
• Of the shares traded away from the primary markets on alternative trading venues, Instinet Europe’s clients received price improvement 54.2 percent of the time (by value traded) and executed at the same price or better than found on the primary markets 96.0 percent of the time.
• By value traded, Instinet Europe executions away from the primary markets in UK, French, German and Dutch equities increased to 32.5 percent in July 2008 from 26.4 percent in May 2008. For UK equities alone, Instinet Europe in July 2008 executed 43.5 percent of its volume away from the London Stock Exchange, compared with 37.0 percent in May 2008.
• Instinet Europe has connected to and is successfully trading on both Turquoise and SWX Swiss Block, the two new multi-lateral trading facilities to have launched in August. Instinet Europe also became a direct member of the NYSE Euronext Lisbon Stock Exchange in August. During the review period, Instinet went live with the BlockMatch™ MTF, Instinet’s European block crossing platform, and announced a bilateral agreement with Credit Suisse to provide mutual access to each others’ dark pools. Additionally, Instinet Europe expects to continue to link to new liquidity pools as they become available, including BATS Europe, NASDAQ OMX Europe, NYSE Euronext’s SmartPool.
• Although not within the scope of MiFID, Instinet’s execution performance in US shares remains strong. In Investment Technology Group, Inc.’s (ITG®) recently published ITG Broker Edge™ report, which covered the four-quarter period ended 31 March, 2008, Instinet was ranked first for execution quality in overall US stock trading and #1 in nine out of the 14 ITG Broker Edge trading categories, as measured by value-added.

Chi-X

Chi-X is a "multilateral trading facility" (MTF). Licencing by the UK's Financial Services Authority means it has been passported through to provide services to firms throughout the European Economic Area due to the MiFiD.

The owners, (majority owned by Instinet Europe) claim their platform is of a faster, cheaper and higher capacity alternative to trading on-exchange. Chi-X was the first order driven pan-European matching engine and central limit order book or Multilateral Trading Facility (MTF) to start trading.

Details of claims are:

TRADING ON Chi-X IS CHEAPER - Equity trading is up to ten times cheaper (estimated cost advantages based on an Chi-X internal review) than trading on Europe's traditional stock exchanges. Built on a low cost business model, Chi-X offers lower explicit transaction costs [Click here to find out more]

TRADING ON Chi-X IS FASTER - Traders can execute trades on Chi-X up to ten times faster than major European exchange order driven systems measured by Transact Tools

MiFID COMPLIANCE - Market participants have the opportunity to route orders and trade report to help satisfy MiFID best execution and transparency requirements

STANDARDISED CONNECTIVITY - Chi-X connectivity is provided using the FIX (Financial Information eXchange) protocol 4.2

TRADING ON Chi-X REDUCES YOUR MARKET IMPACT - Traders can slice and represent their orders across a number of liquidity pools to reduce their market impact

REDUCTION OF IMPLICIT TRANSACTION COSTS - Chi-X could help reduce implicit transaction costs

WIDER TRADING OPPORTUNITIES - We offer trading opportunities when the main markets are closed

ARBITRAGE OPPORTUNITIES - Trading on multiple venues in the same instruments offers arbitrage opportunities

TIMING AND OPPORTUNITY COSTS ARE REDUCED - Real time clearing and greater certainty of execution significantly reduces trading costs

LIQUIDITY FLOW - In addition to the flow of market participants who can smart route to Chi-X as part of their MiFID compliant best execution policy



Chi-X


The Chi-X core is comprised of three primary applications: the Matching Engine, FIX, market data connectivity and a number of secondary applications. The Matching Engine is a proprietary system that resides on the Linux operating system.

Alternative trading systems

Chi-X
Multilateral trading facility developed following MiFiD. Majority owned by Instinet Europe
Direct Edge
US-based multilateral trading faciltiy or trading platform.
Equiduct
Multilateral trading facility majority owned by Borse Berlin and Burgundy. Nordic equities markets are the main target.
European Multilateral Clearing Facility
Clearing unit set up by Fortis for European alternative trading systems.
MTF
Multilateral Trading Facility
Nasdaq OMX Europe
Pan Euopean Multilateral Trading Facility (MTF) backed by Nasdaq OMX
PEX
Small multilateral trading platform for the Portugese market

CA Cheuvreux Joins Euro Millenium

CA Cheuvreux has joined Euro Millennium, a neutral dark pool of liquidity for pan-European listed cash equities that was successfully launched by NYFIX International earlier this year.

CA Cheuvreux will offer the benefits of reduced market impact and anonymity to its large base of buy-side and sell-side firms, offering a reliable and proven answer to the dramatic changes observed in European equity markets since the implementation of MiFID.

Euro Millennium is the first truly open European dark pool. It currently matches UK-listed equities, and will be rolling out other major European markets over the course of 2008. Euro Millennium is built upon the proven technology that powers NYFIX Millennium(R), a leading independent US dark pool in operation for the past seven years. Euro Millennium allows participation from both buy-side and sell-side firms seeking price improvement and minimal market impact.

Jerry Lees, Head of Alternative Execution Services at CA Cheuvreux commented: "CA Cheuvreux's strategy is to offer neutral, unbiased access to all new liquidity venues across Europe, enabling our clients to customise their Smart Order Routing strategies to achieve their investment objectives. As the first European neutral dark pool, Euro Millennium further increases the liquidity options open to our clients."

Adding to this, Chris Smith, Director, NYFIX International, said: “Euro Millennium was born out of a committed year-long partnership with buy-side and sell-side participants who have provided valuable advice and feedback through our Advisory Board. We are very proud that Euro Millennium reflects the rapidly evolving needs of our clients in today’s environment of dramatic regulatory change and increased competition. CA Cheuvreux joining Euro Millennium reinforces the depth and neutrality offered by the platform and we are delighted to have them onboard.