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Q1 2020 Feature

Capital Markets Trends & Innovations

By Dr Robert Barnes, Global Head of Primary Markets & CEO Turquoise, London Stock Exchange Group

Dr. Robert Barnes, LSE Group

Primary Markets recognise Fintech as 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 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’s financial centre increasingly has 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, exemplifying cross-border co-operation and ability to deliver 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 world-wide such as Brazil, Russia, and China without negative interest rates. In 2019, Shanghai-London Stock Connect launched on London Stock Exchange’s International Order Book’s new Shanghai Segment.

This offers investors the same developed market buying and selling experience as that for 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.

Calisen, with a market cap over £1 bn, is the latest to join the cohort of 79 companies and 1st Main Market IPO to secure a Green Economy Mark on admission to the Premium Segment in February 2020 on London Stock Exchange.

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 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. With low interest rates, every efficiency contributes to long term investment returns.

In 2020, Turquoise expands its catalogue of examples of unique liquidity. While both dark and lit order book trade sizes throughout Europe average less than €0.01m per trade, Turquoise Plato Block Discovery™ customers continue to set new execution records.

Figure 1 shows a price chart of Airbus on 19th February 2020 during the month when global concerns of coronavirus (COVID-19) drove market volatility. On this day, Turquoise Plato Block Discovery™ matched a single trade of more than €23m, a new record for a single order book trade. The chart shows this €23m trade time stamped at 14:34:22. Moments later at 14:34:26, a trade of more than €3.05m matched.

This unique liquidity is available thanks to European regulations that enable a well-defined framework for trading and transparency, including combined MiFID waivers that support innovation.

Many investors continue to seek potential price improvement from Turquoise Plato™ to benefit from the efficiency of a single system combining Reference Price and LIS (Large In Scale) waivers to deliver lower implicit costs of trading while minimising fragmentation because investors can send a range of orders to a single order book with Market Identifier Code TRQM.

In just 6 years, from March 2014 through to end of February 2020, Turquoise Plato™ traded more than € 1 trillion, single counted, with buyers and sellers matching at the respective Primary Market Best Bid and Offer midpoint. Similar workflow serves all securities – UK and European, blue chips to mid and Small caps – including AIM 100+ securities which can have average bid offer spreads more than 10x wider than those of FTSE 100 blue chips.

Figure 2 highlights continued growth of monthly value traded and new records set in 2020 via Turquoise Plato Block Discovery™, designed for larger sized orders within the Turquoise Plato™ order book.

Asset Managers from Brazil to China have enquired about the potential to scale Turquoise Plato™ midpoint and electronic block trading via Turquoise Plato Block Discovery™ given the empirical benefits investors in UK & European equities have experienced, including quality execution on order book, fewer settlement and reconciliation events with increased trade value, minimal market impact, and lower slippage costs.

Note how behaviour changed with industry adoption of Turquoise Plato™ designed in partnership with international asset managers, global banks and domestic European brokers. Figure 2 lists new Records via Turquoise Plato Block Discovery™ to end of February 2020 and compares profiles on two dates of high activity: 24 June 2016, the day after the Brexit vote; and 28 February 2020, ending a week of market sell-off coincident with concerns about coronavirus (COVID-19) and that day’s MSCI quarterly rebalancing. While each day recorded a similar €2.1bn value traded in Turquoise Plato™, on 24 June 2016 only 3% of Turquoise Plato™ activity matched via Turquoise Plato Block Discovery™ whereas by 28 February 2020, that number grew to 55% and a new record of more than €1.1bn matched via Turquoise Plato Block Discovery™. The insight is that even during times of heightened activity and increased volatility, the market has evolved to embrace the innovations of Turquoise Plato Block Discovery™ to trade large as well as small sizes enabled by the framework established by European authorities, helping investors even more efficiently get their business done.

Independent firm Rosenblatt Securities confirmed Turquoise Plato™ as the largest European dark order book, rated No.1 of 21 venues by value traded, and verified new records in calendar 2019 and again for the month of January. Thank you to our customers.

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. Frequent Batch Auctions match many trades with small fill sizes, contributing to the €0.01m average trade size for European equities. Turquoise Plato Lit Auctions™ can instead match a wider range of trade sizes, including a material portion above LIS and trades above €500,000 in size spanning stock names of15 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 members, via single connection, to trade securities of 19 developed and emerging European countries – 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. Turquoise timestamps trades to 1 microsecond, directly publishing trade data. MiFID post-trade transparency is pre-trade transparency for the next trade, enhancing decisions.

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.