The London Stock Exchange has executed a daring raid on the 'home' turf of Nasdaq OMX, after signing a letter of intent with Oslo Børs to establish a strategic partnership and provide a new trading system.
Oslo Børs - in which Nasdaq/OMX holds a ten per cent stake - currently has agreements in place to use two different trading systems (Saxess and Click), both of which are supplied by Nasdaq OMX. The agreement for Saxess expires in 2010.
A planned move to Nasdaq OMX's next generation Genium platform stalled in April, after the Norwegian exchange discovered that the 'integrated' package on offer in fact seemed to comprise three separate platforms for trading in equities, fixed income and derivatives.
Under the agreement with the LSE, it is envisaged that the Norwegian market operator will install the London Exchange's TradElect equity trading platform, which is also used by the Johannesburg Securities Exchange and Borsa Italiana. Oslo Børs says it intends to use the LSE as its partner for the systems it uses for equities, fixed income instruments and derivatives, as well as for distribution of market data.
Subject to the successful completion of terms, Oslo Børs and LSE will also cooperate on market and product development, and a "deepening of ties" between the two markets.
Bente Landsnes, chief executive officer of Oslo Børs, says: "We have reached excellent results through our collaboration with Nasdaq OMX. However, based on the new competitive situation in which we find ourselves, we see that a partnership with the London Stock Exchange will be more complementary for our strategy."
Migration to the TradElect trading system is likely to involve project costs for Oslo Børs of approximately Nkr60 million. Assuming the current levels of trading volume and value executed on the Norwegian exchange, the annual cost of using TradElect is expected to be equivalent to the costs incurred for the Nasdaq OMX platform.