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Chi-X throws down gauntlet to Spanish exchange

Source: Reuters - Tue 6th Sep 2011

Chi-X Europe, the broker-owned trading platform, has challenged Spanish exchange Bolsa y Mercados Espanoles (BME) by offering clients free trading of Spanish shares in a bid to break the BME's stranglehold on Europe's last untapped market.

Chi-X said on Monday it will start a three-month price promotion on Oct. 1 that will enable its main clients to trade the six largest Spanish blue-chips for free if they surpass a certain number of trades.

Orders in Santander , BBVA , Iberdrola , Inditex , Repsol and Telefonica are free once clients have traded 200 million euros in those stocks in a single calendar month.

"Spain has not seen any of the beneficial cuts to the cost of trading that other major European markets saw," said Alasdair Haynes, Chief Executive of Chi-X Europe.

The move reflects frustration at Chi-X that it has not replicated its success in Spain, a failure it blames on the relatively high cost of trading Spanish shares.

Firms trading stocks away from the domestic exchange are obliged to report those trades to the BME and pay a fee, which makes trading on Chi-X more expensive than trading on the main market, Chi-X said.

"We are in effect levelling the playing field and hoping to increase liquidity in the half-dozen key Spanish stocks that are constituents of the Euro Stoxx 50 index," Haynes said.

Chi-X Europe, the largest single trading venue in the region last month with 220 billion euros traded, has a 1.6% market share in Spain, compared with 27.7% in the UK, 18.5% in Germany and 18.1% in France.

Chi-X, with rivals Bats Europe and Turquoise, emerged in 2008 to take advantage of the European Commission's markets in financial instruments directive (Mifid) which allowed firms to challenge the region's exchanges for the first time.

The London Stock Exchange , NYSE Euronext and Deutsche Boerse have lost big chunks of trading in their listed stocks to the new entrants; only the Spanish exchange has kept its market share near pre-Mifid levels.

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