Industry viewpoint : Dr Robert Barnes : Turquoise


Dr. Robert Barnes, CEO, TurquoiseDr Robert Barnes, Global Head of Primary Markets & CEO Turquoise, London Stock Exchange Group offers his insights of Primary & Secondary Markets innovations.

Primary markets.

In 2019, fintech remained an important sector with Nexi’s listing on Borsa Italiana being crowned the largest IPO in Europe in 2019 and Network International the biggest IPO on London Stock Exchange.

In London, seven new jumbo listings of companies above £1bn market capitalisation included Coca Cola European Partners at £18bn. International offerings accounted for 22 of 47 new London listings in 2019, representing half of capital raised, reflecting the increasing trend of globalisation against the backdrop of low interest rates.

Since rates turned negative in Europe in 2015, London as a financial centre has increasingly attracted international companies. For example, in 2017, they represented nine out of ten of the largest IPOs on London Stock Exchange. Two were global depositary receipts (GDRs) denominated in US dollars and settled in Euroclear Bank.

This trend continued in 2018 with significant dual listings from emerging markets, most notably the successful issuance of Slovenia’s Nova Ljubljanska Banka (NLB) – the largest bank IPO in EMEA – as well as Kazatomprom from Kazakhstan. In both cases the community of international investors active in London contributed the majority of risk capital, and are great examples of co-operation and the ability to deliver successful investments back to the home market. In fact, Kazatomprom returned to the London public markets in 2019 for another successful follow-on issue.

The insight is that investors are seeking growth, and are open to gaining exposure to companies from countries such as China without negative interest rates. Last year, saw the launch of Shanghai-London Stock Connect on London Stock Exchange’s new Shanghai Segment on the International Order Book (IOB). This offers the same developed market customer buying and selling experience as FTSE 100 securities. The first issuer, Huatai Securities, which raised $1.7bn on Shanghai-London Stock Connect, is considered a great success.

Meanwhile, in Europe, since MiFID II, stock exchanges in the region have registered as SME European Growth Markets. AIM, a leading growth market continued to lead peers in Europe, accounting for approximately 60% of all IPO and further capital raised among SME European Growth Markets. AIM Italia similarly achieved a stellar year in 2019, its 10th anniversary, with 31 IPOs, a new record.

Last year also saw sustainability become even more significant in the aftermath of the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) which met in October in Tokyo. It highlighted the importance of the transition to a low carbon economy as well as relevant, quantitative disclosures. London Stock Exchange launched the Green Economy Mark for Equity Issuers and the Sustainable Bond Market for Fixed Income, innovations among Primary Markets.

On another note, London Stock Exchange was privileged to be selected as the sole Primary Market for the first public bond listing by Saudi Aramco. Its landmark bond issuance raised $12bn with books reflecting demand via London of more than $100bn.

Funds in London also did well, attracting over £5bn further capital during 2019, more than all of 2018 (£3.5bn).

Secondary markets
Secondary trading markets in Europe continue to offer a full suite of execution mechanisms to help investors deploy capital into equities markets, as well as minimise slippage costs of buying and selling. This is important, particularly in an economic environment of low interest rates, where long term investment returns are so important.
During 2019, Turquoise added further to its catalogue of empirical examples of unique liquidity. This includes Turquoise Plato™ whereby pre-trade the price and size of orders are not displayed, it is considered the industry leader in midpoint and electronic block trading – particularly via Turquoise Plato Block Discovery™. There is also Turquoise Plato Lit Auctions™, the frequent batch auction mechanism that caters also for large sizes and is transparent pre-trade.

These Turquoise mechanisms provide consistency in quality of execution, evidenced by low price reversion after the trade and the potential to trade larger sizes. Executions at midpoint also offers potential price improvement. It’s worth noting that issuers and investors using Shanghai-London Stock Connect also benefit from the Turquoise LSEG ecosystem.

Figure 1 displays trades on 26th June 2019, where the Y-axis is price and the X-axis is time. The bubble size reflects value per trade (NB Shanghai-London Stock Connect starts at 9am UK time instead of traditional 8am start on London Stock Exchange). On this day, London Stock Exchange’s gold coloured trades are most active morning and afternoon. Turquoise midpoint channels add incremental liquidity as investors find trades find trades matching at the midpoint of London Stock Exchange’s best bid and offer. Together, London Stock Exchange and Turquoise enable investors to trade throughout the day.

Independent firm Rosenblatt Securities confirmed Turquoise Plato™ as the largest European dark order book, rating us No.1 of 21 venues by value traded, setting new records again in 2019 – thank you to our customers.

Figure 2 highlights continued growth of monthly value traded and new monthly, weekly and daily records set in 2019 via the Turquoise Plato Block Discovery™ service, designed for larger sized orders within the Turquoise Plato™ order book.

A further trend is the growth of Turquoise Plato Block Discovery™, from less than 5% to more than 45% of all the Turquoise Plato™ midpoint value traded by calendar 2018, reflecting a significant change in investor behaviour by sending much larger orders to the market.

By November 2019, customers using Turquoise Plato Block Discovery™ traded over €250bn – more than any other provider as a fully automated service, without the fading associated with manual firm-up models. The insight is that Electronic Block Trading at midpoint works, and Turquoise is fully adopted by the global investor community, ready to scale beyond UK and European markets.

Customers on Friday 13 December 2019 set a new daily record of €1,064 million value traded via Turquoise Plato Block Discovery™, contributing to a new weekly record of €3.29bn during 9-13 December 2019.

Turquoise Plato Lit Auctions™ offers pre-trade transparency and multilateral liquidity for trades of all sizes. Quality is high with low price reversion recorded after trades. While average sizes of European equities remain around €10,000 per trade, and other Frequent Batch Auctions match many trades with small fill sizes, trades matched via Turquoise Plato Lit Auctions™ range from small to large, including a material portion above Large In Scale (LIS), and trades above €500,000 in size spanning stock names of 15 countries. If one is not accessing Turquoise Plato Lit Auctions™, how can one be sure one is achieving best execution?

Figure 3 shows unique liquidity example on 31st October, the day Fiat and Peugeot announced a merger. Investors using Turquoise Plato Lit Auctions™ achieved trades in large multi-million sizes, and this clearly differentiates the unique liquidity profile of Turquoise compared with that of other Frequent Batch Auctions’ venues.

Furthermore, Turquoise allows, via single connection, members to trade securities of 19 European countries – developed and emerging – and settle each trade in the respective country’s Central Securities Depository. This means neither the cash nor assets leave the respective home country, by which Turquoise enables investors extra ways to buy and sell to get their business done. More than a decade of innovation has refined the specialised Turquoise offerings designed in partnership with the largest global asset managers and leading LSEG member firms.

Turquoise has established a track record of innovation and partnership supporting efficient capital markets, and we look forward to continuing co-operation with the global investor community in 2020.

For more information on Turquoise please visit: @tradeturquoise or

For more information on global fintech listings in London, see:

©BestExecution 2020


Buyside focus: It’s all about the data 

Heather McKenzie explains why robust frameworks are key in unlocking the value of data. Although...

Laying bare the risks

Jannah Patchay examines the digital solutions that can be applied to the ESG data...

Regulation & compliance: The slow road to the CSDR 

Gill Wadsworth explains why the regulation is still a work in progress after all...

Buyside focus: It’s all about the data 

Heather McKenzie explains why robust frameworks are key in unlocking the value of data. Although...

Laying bare the risks

Jannah Patchay examines the digital solutions that can be applied to the ESG data...

Regulation & compliance: The slow road to the CSDR 

Gill Wadsworth explains why the regulation is still a work in progress after all...