For many years the retail investor was in the shadows of the broker landscape but increasingly they are emerging as a strong force. Individuals are now having to take greater responsibility for their retirement and are looking for greater choice in trading venues.
To this end, the London Stock Exchange Group recently launched Turquoise Retail Max™ – which is designed to support European retail brokers in meeting their best execution obligations and deliver price improvement for retail end investors when trading pan-European securities.
“Retail flow is increasing,” says Adam Wood, CEO, Turquoise Global, and Head of Equities Trading Commercial Proposition at the LSE. “The order size is now between 5,000 to 7,000 euros compared to 4,000 euros on lit markets. The order size on neo brokers is much smaller but we wanted to give them them greater choice and the ability to wanted to give them a choice and access to institutional flow.”
In the past, European retail investors were used to seeing their orders sent to exchanges, and expected them to participate in the price formation process. However, as each trading venue has a different business model for charging market makers and brokers, it was challenging to know with certainty whether executed trades achieved the best possible outcomes, according to Wood.
Turquoise Retail Max™ offers retail investors the ability to interact with retail liquidity providers as well as existing diverse market participants. A retail order will only trigger an auction if it creates a crossed order book. They are also exposed to Level 1 Top of Book Turquoise Best Bid/Best Offer, while aggregated volume from retail liquidity provider’s limit orders is made available to retail brokers.
Alicia Suminski, senior business development manager execution services at Turquoise Europe also also notes the service uses the lit auction because it re-interrogates the market at that moment and selects the price which maximises volume nearest the midpoint.
The other benefit is that the retail brokers’ fees are waived indefinitely while real time market data redistribution licence fees, as well as retail brokers and private investor user fees, are also waived.
After Europe, plans are to expand both the asset classes and geographies, to the US and Asia, and to offer even greater choice and flexibility.
©Markets Media Europe 2023
