UPDATE 1-Nasdaq OMX Nordic moving to fast, cheaper platform

* Expects 10 high-frequency trading members by end-2010

* Says members to benefit as volume up through capped fees

* Transaction costs cut up to 84% by end-2010 vs early 2009

(Adds dealer comment)

By Jane Baird

LONDON, Feb 4 (BestGrowthStock) – Nasdaq OMX’s
stock exchanges are set to migrate to a faster, cheaper share
trading platform on Monday, which it hopes will help attract
high-frequency traders and boost volume by 25 percent in 2010.

The shift to Nasdaq’s INET technology is the latest in a
series of strategic steps by the company within the past year
that include adoption of harmonised tick sizes, the move to a
central clearing house and the introduction of a capped fee
structure from Jan. 1.

Together they will bring down overall transaction costs for
clients by as much as 84 percent by end 2010 from a year ago and
90 percent from three years ago, estimated Hans-Ole Jochumsen,
president of Nasdaq OMX Nordic.

“Now we are told we’ve done everything they (London dealers)
have asked for. All their main agenda points have been
delivered,” he said at a media briefing on Thursday.

One dealer voiced his support for what they had done so far.

“Fundamentally they’ve done a lot,” said a London-based
executive at a large trading firm. “They are moving to a new
platform; the tick size change was brilliant, the clearing house
was superb.”

EMCF has a strong relationship with most big London brokers,
he added.

“We will see how it plays out,” he said, adding that Nasdaq
Nordic’s London-based rivals have a time advantage in terms of
executing trades.

“It has two trading communities in two geographic locations,
and it can’t please them both.”

The exchange expects to include around 10 high-frequency
traders among its members by the end of this year, which is part
of the reason it estimates a 25 percent volume increase, he
said.

In 2009, Nasdaq OMX Nordic was the last of the major equity
markets to add a central clearer — EMCF. That is the same
clearer used by its chief rival, Chi-X.

The move to the same, smaller tick sizes significantly
increased the percentage of time its markets offered the best
bid-ask spreads versus Chi-X, Jochumsen said.

MARKET SHARE DOWN

Thomson Reuters data shows that Nasdaq OMX Nordic’s share of
trading in its three major markets of Sweden, Finland and
Denmark fell from 95 percent in January 2009 to 83 percent in
January 2010, while Chi-X’s share rose from 3 to 8 percent.

Nasdaq OMX Nordic’s overall trading volume in those markets
was up, however, to 45.8 billion euros ($63.55 billion) in
January from 40.4 billion a year ago, the data shows, partly
helped by post-crisis market recovery.

On Jan. 28, the Nordic exchanges showed their third-largest
ever trading day at 415,586 trades, the company said.

“We are now planning something very demanding” by migrating
seven exchanges in seven countries with seven different
regulators serving more than 160 members to one platform on the
same day, Jochumsen said.

As a result, “our Nordic exchange will be able to share the
cost of trading technology with the Nasdaq market in the United
States, which is 100 times bigger,” he said.

The new platform also will have much greater potential
capacity and cut the fastest time to execute a trade by 10 times
to 250 microseconds, he said.

The new price structure, meanwhile, has set a cap on
members’ fees based on their trading volumes over a three-month
period last year, he said. Once they exceed the cap, all trades
are free.

In January, 15 members reached their capped levels and had
one or more free trading days, he said.

“If everything goes as it should, we will see volume growth
of 25 percent this year, which should reduce member trading fees
by around 20 percent,” Jochumsen said.

Investment Advice

($1=.7207 Euro)
(Editing by Jon Loades-Carter)

UPDATE 1-Nasdaq OMX Nordic moving to fast, cheaper platform