As reported by Tim Cave of the Financial News, U.S.-based Getco, the secretive high-frequency trading firm, has delivered rare insight into its European strategy by revealing it has given its backing to the London Stock Exchange-owned (LSE.LN) trading venue Turquoise and is ready to “sponsor new entrants.”
Getco Europe, the London division of the Chicago-headquartered firm Getco, made a series of disclosures on its strategy during a hearing last month with U.K. competition authorities on the impact of the proposed tie-up between Bats Global Markets and Chi-X Europe.
According to documents released by the Competition Commission this week, Getco said that it would invest in new venues “for strategic reasons if it felt that consolidation in the marketplace went too far and harmed pricing or competition”. The firm said it was “relaxed about consolidation as it felt that, should competition weaken, it had the ability to sponsor new entrants.”
It also added that it had decided to “connect to Turquoise recently, after it moved to new technology.”
The support of Getco and other high-frequency trading firms are crucial to the success of alternative trading platforms, as they provide significant amounts of volume through market-making activities.