Their goal was to provide low-cost trading services to professional traders, in particular fund managers who were traditionally forced to trade through intermediaries. The impetus for establishing the company is the sheer size of this relatively under-serviced market. However, in terms of trading, fund managers have been charged a premium and excluded from trading directly with each other. Tradepoint, which operates as a UK Recognised Investment Exchange, has been four years in the making and became operational last September. At the heart of the new exchange is a powerful trade matching computer.
Customers can programme pre-set trade strategies.
At the simplest level, these cause the customer to buy or sell at pre-defined trigger points. This trading takes place through an electronically maintained Public Limit Order Book, one for each security. Traditionally, when wishing to buy or sell stocks and shares on the London Stock Exchange, investors go through market makers or brokers. In order to get a competitive price, it is often necessary to get a number of quotes thereby showing one's hand and causing a market impact even prior to placing an order. This can increase trading costs significantly particularly for professional fund managers who typically deal in large volumes.