CA Cheuvreux to Offer Saudi DMA Trading

CA Cheuvreux plans to hold its clients' positions as a nominee in order meet the local regulatory residency requirements. "Due to long-term group investments in Saudi Arabia, CA Cheuvreux has a broker presence there, which enables us to establish Saudi CFD products," he explains. The brokerage will also comply with Sharia law requirements and will issue electronic tradable CFD swaps, he adds.

Bank officials also plan to access other Middle Eastern markets-including Dubai, Abu Dhabi, Kuwait and Egypt-over the course of 2009 using third-party connections. This is because the markets are relatively small and the exchanges' fees tend to be standardized, making direct connections impractical considering the infrastructure costs, according to Lees. Eastern European countries are also on the list of places the broker will connect to, he adds, without giving further details.

Here in a Blink

CA Cheuvreux clients will have another liquidity pool to tap as the brokerage rolls out its internal crossing network, dubbed Blink, in Europe (DWT, Nov. 17). The crossing network has been rolled out internally and it will available to clients by January 2009, says Lees.

Blink, which was internally developed, creates a mirror image of any transaction that goes through it. For instance, if the smart order router heat map prescribes that orders that enter the system should go to different pools of liquidity, the orders will drop down into the relevant markets, explains Lees. "Now, 64 or 65 percent of our order flow tends to be limit orders, which means there is potentially a lot of transactions that could get matched up," he adds.

The platform is also designed to track resting orders within the various liquidity pools, according to officials. If a subsequent order comes through and is crossable with those resting orders, Blink will cross the trade and pull the resting order out of the market, Lees says adding that Blink will cross the trade as if they were in the market place. By pulling out an order, CA Cheuvreux aims to improve the likelihood of getting successful crosses, he adds.

The second stage of the project, which should go live in the second or third quarter of 2009, will include adding a dark pool of liquidity. The feature rollout is currently awaiting the U.K.'s Financial Services Authority (FSA) approval for multilateral trading facility (MTF) status. Cheuvreux officials plan to route orders to other brokers, dark pools and MTFs as well as to allow them to rest orders in the new pool.

CA Cheuvreux is currently using smart order router technology from trading platform provider Ullink to connect to Chi-X, Turquoise, Nyfix Euro Millennium, Nasdaq OMX and Bats Europe. "We have a list of 24 potential venues, including broker venues, that we could connect to in Europe and we'll take a pragmatic approach as to where and when we connect over time. It would be impractical to connect to all of them in the first instance," says Lees.