How has the summer volumes been?
Olof: Coming back from holidays I was surprised to notice the low activity in Nordic equities (including OTC and the MTF
Författare: Redaktionen
As Burgundy now offers trading in
I can see that you are trading in NGM-shares now
How are you preparing in order to get ready for trading?
Olof: Presently, we are very busy setting up the platform together with our Trading Participants, this is a challenging task as multi-venue trading is new to most Nordic firms. We are in a position to take a quantum leap and put the Nordics in the forefront of equity trading technology again. The last time was back in the late eighties when Sweden was the first stock market to abolish floor trading.
Is the trading platform ready or are you still working with it?
Olof: We finalized the testing, which has been going on for over six months, in mid-April. Now we are assisting Vendors, Independent software developers and Trading Participants to certify their applications and get them ready for trading.
Is the surveillance system in place and ready?
Olof: Yes, we have a state-of-the art platform capable of detecting abnormal or suspicious trading activity in real-time, supported by a professional staff.
What are you in person focusing on during the days before pre-launch?
Olof: Mostly supporting our competent and energetic staff, who are working flat out in order to get clients connected in time for our May pre-launch. Everybody is really enthusiastic about the service and we have a big interest from Nordic and European firms.
Burgundy
It seems as you have reached a new higher trading volume level, or is it just temporary?
Olof: No, it is correct. During March we have averaged on 5.5 percent market share in OMXS30.
What are the reasons behind that?
Olof: As I have said before customers are getting the technology projects in order but also when you are starting to get volumes around 10 percent in some instruments it attracts even more volumes, since you need to go where the best price is.
Is it that easy
How has the trading activity developed lately?
Olof: If you look at the development since December we have seen quite an increase in trading volumes and market shares. The market share in OMX S30 has gone from 1.39% the last week of December to 3.98% last week (the first week of March).
Is it a general increase or is it in some specific instruments?
Olof: The increase has especially been strong in the OMX S30 shares, especially in some of the largest ones; Ericsson B has gone from 0.85% last week of December to 3.55% first week of March. H&M from 1.1% to 5.39% and Boliden from 0.85% to 6.16% for the same period. You can see similar development in several other instruments as well.
What is the reason for the change?
Olof: Existing customers have increased their trading in general. Many of them are starting to get their technology in order which leads to increased volumes.
What is happening on the market?
Olof: The financial markets in the Nordic countries are changing due to increased competition between exchanges and new trading platforms such as Burgundy. The fragmentation on the market is a fact and Nordic equities are now traded outside the stock exchanges. We have seen that the fragmentation has been quite dramatic, with approximately 28 percent* of trading in Nordic equities are now taking place outside of the listing exchanges.
What becomes important then?
Olof: It is significant that market data vendors supply information from all relevant marketplaces where e.g. Burgundy is one of the new ones. This is important so that the listed companies, the media etc keep in mind that they should present numbers from all marketplaces. This can be done by requesting that your information vendor include Burgundy and other MTFs in their statistics. This is important to consider when providing share information in annual reports, quarterly reports or on websites and elsewhere.
What else can happen?
Olof: That one comes to the wrong conclusions, such that trading in a company’s share is significantly reduced, while in fact the liquidity just has moved. The turnover in a stock is an important factor when evaluating an investment. Another thing is that if you do not have the full picture from all marketplaces you risk not obtaining the best price.
When some 28 percent of trading in Nordic equities is taking place on marketplaces other than the listing exchanges, companies with a fragmented share could miss a substantial part of their trading volume.
Am I as investor affected by this?
Olof: The stock market lists that are shown in the papers today may not show correct volume, high and low price. This can lead to wrong conclusions as demonstrated in an article during the fall where one share was described as having lost significant volume, but in fact the trading had moved away from the primary exchange to other marketplaces, including Burgundy. If you are a fan of technical analysis you should be aware that you are not looking at all trading in a particular stock. We at Burgundy are regularly meeting with the editors of media to make them aware of these important issues.
Do you have any ideas of interesting web pages or similar that brings up news about the MTF industry?
Olof: Fidessa’s Steve Grob, writes really interesting articles about the fragmentation, the last one was ”MiFID hits main street”
I definitely think all of you should read this article.Any other interesting views?Olof: Talking about Fidessa – if you have not done it you should try their Fragulator-tool that show you the volumes in different indices and instruments, watch for instance Volvo or TeliaSonera.
Any news for this week?
Olof: Today we launched trading in five Norwegian shares, StatoilHydro, Yara, REC, Seadrill and Telenor.
Were there any trades?
Olof: Trading took off almost immediately and we saw action mainly in StatoilHydro which is the most frequently traded stock in Oslo.
What are the differences and similarities compared to the launches in Sweden and Denmark?
Olof: This third launch is a bit different since the Oslo community preferred to start with a some of the most traded shares, as opposed to Sweden and Denmark. We also see similar technical challenges with clients in the early stages of adopting new technology with Smart Order Routing, enabling them to offer clients the increased liquidity by sourcing from multiple venues.
It has been really low trading volumes, are you worried?
Olof: No, it has been as I anticipated before we started, even more some days. I expect trading volumes to progress in June when trading participants have had a change to fine-tune their applications and ensure that the whole STP chain works as planned!