October 13, 2016

Two very different innovations found equal favour with the judges, so both Aquis Exchange and Bats Europe pick up a trophy in this category.

A dead heat is a rarity in the FN awards, but the judges gave identical marks to Aquis for the highly unusual change to its rulebook in February 2016 to limit the way proprietary trading firms can interact with the platform, and to Bats for its continuous auction book model.

There’s a common theme. Both innovations aim to court orders from asset managers.

The Aquis rule change means proprietary trading firms can only post passive orders, which are typically placed by market-makers to populate an order book and provide liquidity, rather than aggressive orders. It was a bold move – proprietary trading activity is often viewed as a key element of a diverse and liquid order book – but Aquis wanted to stamp out predatory activity. The move was met with dismay by some prop firms, which left the platform immediately, but some buyside traders like it.

Even though the platform accounts for a only small proportion of overall trading in Europe, the move helped Aquis’s market share of European equity trading by value double to more than 1%.

Bats’ periodic auctions book offers investors an innovative way to trade regularly in size by running auction-style trading throughout the day on a separate order book. Unlike other continuous auction models, Bats’ periodic book is a lit market because the indicative price and size of each auction is published pre-trade, meaning it will sidestep the caps on dark pools coming in under Mifid II.

One judge who voted for Bats, said: “It might look like they try lots of things to see what sticks, but actually everything they do is well thought out and always done in consultation with clients.”