Figure 1: Aquis Exchange PLC: Where Fintech Meets Spotify

Source: Google Stock Images

Inspired by the subscription models of mobile phone contracts and the rise of Spotify and Netflix, Alasdair Haynes (CEO) of Aquis Exchange (AQX.L) examined why financial services firms haven’t yet taken note and implemented the business model that’s been so successful in other sectors. His moment of inspiration gave rise to a Pan-European cash equities trading exchange with a unique subscription and anti-high-frequency trader model. If you have poured over Michael Lewis’s Flash Boys, you’ll understand the problems high frequency prop-traders cause to spreads and liquidity. Aquis’s model prevents this style of trading in answering the challenge of Europe’s regulatory overhaul through increasing transparency and avoiding internal dark pools. Even if you haven’t read Lewis’s book, you’ll still be aware that best execution policies mean that firms need to go the extra mile to ensure clients are treated fairly, as well as giving them more for their money. Current subscribers include 15 of the 17 top tier banks (28 financial institutions in total). Under the pay-for-what-you-consume business model, the highest subscription costs £50,000 per month for unlimited trading. It sounds inexpensive for such a high quality service but Aquis is still a relative newcomer and building market share. Monthly trading volumes have grown from €12bn in December 2017 to €35bn last month in the face of competitors such as London Stock Exchange, Deutsche Börse and Euronext. In fact, Aquis is already the 8th largest exchange with a 4% share of the continuous Pan-European equity share trading market. The introduction of new best execution rules under MiFID II means that financial institutions must consider Aquis when executing client orders. Invesco Asset Management’s taking a significant stake and the increased buying interest from investors since the beginning of November come as no surprise.

Joel Bayley Corporate Broking

 

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By Alastair Winter

Cheif Economist at Daniel Stewart

alastair.winter@danielstewart.co.uk