Virt-x Failing In Its Aims, Says Report

by Ulrika Lomas, Tax-News.com, Brussels

26 June 2002

Virt-x, the joint brainchild of the Swiss Stock Exchange and British electronic trading platform, Tradepoint celebrated its first birthday on Tuesday.

The London-based electronic exchange was designed to trade the top 600 European stocks. It was hoped at the time it was launched that a 'one-stop' European platform would prove attractive to investment bankers, who have traditionally complained the fragmented European equity trading results in high costs.

However, according to a Swissinfo report, virt-x has failed in its aims, and is said to be looking for a merger partner, with fellow electronic exchange, Euronext tipped to be a hot contender.

According to the Swiss news service, the company has fallen short of a self-imposed target of trading 10% of European blue chips by the end of its first year, and in fact currently trades around 7% of European blue chips. 'Almost all of these - 95% - are shares in Swiss companies, for which virt-x is the main market,' a report marking the electronic platform's first anniversary revealed.

Speaking to Swissinfo yesterday, Andrew Hilton, a UK-based investment expert suggested that: 'Unless there is a sudden and completely unexpected recovery in stock prices and a big increase in trading volumes, then the best exit strategy for virt-x is probably to find a merger partner. That might be the way that virt-x gets itself out of the hole (it is) in at the present time.'

Transaction costs are also a problem for the electronic exchange, according to Mr Hilton.

Although virt-x allows for automatic clearing and settlement of transactions when trades are executed, a factor which should save traders money: 'People don't really believe they are getting the best share prices from virt-x - they believe that the spreads behind buying and selling prices are wider than other exchanges,' he told Swissinfo yesterday.

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