Spain to Launch Alternative Trading Facility

August 27th, 2010

A group of Spaniards from the finance sector on Tuesday announced plans to launch the country’s first alternative trading platform for securities, to compete against the near-monopoly of Bolsas y Mercados Españoles (BME).

Called Pave – for Plataforma Alternativa de Valores Españoles – the project is still in its early stages, but those launching it said they had the support of two unnamed financial institutions in London and one in Spain.

Brokers, bankers and analysts contacted by the Financial Times said they were not aware of its existence. Pave said that further details would be released in October and that the plan was for the Barcelona-based operation to start functioning in the first quarter of next year.

“At the moment we are talking to banks and hedge funds and other investors,” said José María Cueco, a lawyer who is the only named member of the group. “We think there is space for a sharp fall in [trading] costs.”

Multilateral trading platforms, or MTFs, have taken substantial market share from traditional exchanges in other European markets, but in Spain the BME has so far held off competitors with the help of technical obstacles related to the settlement and registration of trades.

Stockbrokers and analysts in Spain and London said it was almost inevitable that the BME would face competition following the rise of MTFs in other markets and European Union pressure for more competition. However, it is unclear how easy it will be for new entrants in Spain – even Spanish businesses such as Pave to break the BME stranglehold.

“The fact that they are launching now isn’t a massive surprise,” said Bruce Hamilton, analyst at Morgan Stanley in London. “It would seem anomalous to us that Spain should continue to see close to 100 per cent of trading via the national exchange when other markets have seen incumbent market share drop to between 50 and 70 per cent.”

Story from Financial Times

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