The announcement that the London Stock Exchange is in talks to buy Turquoise signals the death of the Bourse.
Tied to the Exchange’s departure from the Federation of European Exchanges, it suggests a seismic shift in strategy. FESE has been campaigning for a level playing field of regulation to be run across exchanges, multi-lateral trading facilities, dark pools and internal crossing networks.
The regulations for exchanges (they argue) are making it uneconomic to run an exchange instead of an MTF for example.
It would seem the LSE, having lost significant market share over the last year, not only agrees that this is true but sees arguing for justice to be pointless.
Chief executive Xavier Rolet recently said that regulatory burdens have held back the launch of the LSE’s Baikal, a dark pool and aggregator of liquidity. As Turquoise performs those functions it will presumably replace Baikal, cutting the red tape that held the LSE back.
The move is a shrewd one. Combined with the recent purchase of MillenniumIT to replace its TradElect system, Rolet now has the old LSE head on a much younger body.
While the older exchanges appeal to the referee, he is continuing to fight, by the same rules as the new kids on the block.