Turquoise to Start ‘Dark Pool’ Aggregation Service

By Adam Haigh

Dec. 22 (Bloomberg) -- Turquoise, an alternative European stock-trading system set up by the largest Wall Street firms, said it will start a pan-European aggregation of so-called dark pools in the first quarter of next year.

Institutional investors are increasingly turning to dark pools, which compete with traditional bourses operated by NYSE Euronext and London Stock Exchange Group Plc and allow investors to disguise their strategies. The systems match orders anonymously and don’t publicly disseminate quotes. Turquoise said its service is subject to the necessary regulatory approval, according to a statement from the London-based firm.

“Many of the most sophisticated trading firms have developed internal dark pools to make their operations more efficient and to improve execution quality,” Chief Executive Officer Eli Lederman said. “We expect that it will attract interest across the European trading community.”

Turquoise, whose founders include New York-based Morgan Stanley, Goldman Sachs Group Inc. and Merrill Lynch & Co., started operating in August.

Traditional bourses are trying to fight off new rivals such as Turquoise by cutting fees and introducing dark pools themselves. Frankfurt-based Deutsche Boerse AG started one called Xetra MidPoint last month, while LSE is setting up a dark pool known as Baikal, after the deepest lake in the world.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.