Pan-European MTF Instinet Chi-X has extended its trading service to cover the top five stocks of the Belgium BEL 20 index, and plans to introduce the remainder of the index's components later in the month.
Instinet Chi-X has been attracting trading volume from brokers operating smart order routing systems, who claim to be achieving significant price improvements over stocks traded on incumbent exchanges.
According to an analysis by Instinet Europe, Chi-X's majority shareholder, execution costs for trades transacted on the underlying exchange is 1.09 bps compared to Chi-X Europe's trading costs of 0.05 bps.
Turnover on the platform grew 78% between the first and second quarter 2008 to EUR132 billion, as volumes doubled to 14 billion bargains. The company now claims to be executing one-sixth of FTSE volume and a significant percentage of Dutch and German blue chips.
Trading in Belgian stocks will be cleared through Fortis' European Multilateral Clearing Facility (EMCF) and will be settled in the Euroclear Central Securities Depositories.
Peter Randall, CEO of Chi-X Europe comments: "Chi-X Europe participants continue to enjoy price improvement and lower trading costs, and we remain committed to providing the European trading community with the benefits of our faster, cheaper and smarter model."
Market observers are undecided as to whether Chi-X is taking liquidity away from the main markets, or simply catering to new arbitrage opportunities from hedge funds and algorithmic traders.
A trading update today from the LSE lends weight to the latter argument. For the three months ended June 2008, average daily order book cash equities trading for the combined UK and Italian markets grew 17 per cent to 936,000 trades, with trading on SETS up 34 per cent to 673,000 trades per day.
The Exchange reported revenue for the first quarter up eight per cent to £178 million on the back of 19% growth in real-time data sales and a 20% increase in clearing and settlement revenue.
Shares in the LSE - which have slumped in recent months over the threat posed by new competition - were trading up eight per cent at 729 pence by mid-morning.